Blue Owl’s Stock Plummets Below NAV—But Is the Market Overreacting Again?
Blue Owl Capital Corp. (OBDC) has witnessed a significant drop in its stock market value, currently trading below its net asset value (NAV). Despite this, the company has maintained a strong credit position and low default risk. OBDC's stock has traded below NAV three times in the last five years, with the market overreacting each time. Currently, the stock has plunged from $14 in mid-September to below $12, trading at around 80% of its NAV. Despite this, CEO Craig Packer has reaffirmed the firm's strong credit position, noting no broad signs of stress or material increase in amendment activity. The company pays a $0.37 regular dividend, yielding 12.4%, and has approved a $200 million share buyback. OBDC's net loan-to-value ratio stands at 42%, with 80% of its loans being senior secured positions, indicating low default risk. Only 1.4% of OBDC's $17.1 billion total portfolio is performing materially or substantially below expectations. However, the company's investments on non-accrual have risen to 1.3% of fair value, up 60 basis points from the prior quarter. In an effort to improve its financial position, OBDC plans to acquire Blue Owl Capital Corp. II in an all-stock transaction. This move is expected to save the company $5 million in administrative costs. The merger was announced on November 6, 2025. Despite the recent drop in stock market value, Blue Owl Capital Corp. maintains a strong credit position and low default risk. The company's plans to merge with Blue Owl Capital Corp. II and the approved share buyback are strategic moves aimed at improving its financial situation. However, investors should keep an eye on the company's adjusted net investment income, which decreased in the last quarter.
