Shares of Blue Owl rose after the private credit company cited SpaceX gains

shares Blue owlthe private credit firm that has been at the center of recent tensions over exposure to software companies, jumped 10% in trading Thursday after executives revealed big gains tied to SpaceX.

“We made about 10 times our money on this investment,” one executive said on the company’s first-quarter earnings call.

Blue Owl has already sold about half of its $1.25 trillion position and continues to hold the rest, he said.

The call was hosted by Mark Lipschultz, Co-CEO, and Alan Kirshenbaum, CFO. It was not immediately clear which executive spoke specifically about the SpaceX investment.

Gains for SpaceX, which is headed toward what could be the largest initial public offering in history later this year, could offset potential losses elsewhere in Blue Owl’s portfolio if the software companies default, the executive said. This helps allay concerns about the fact that the latest AI models may force some software companies out of business.

While private trusts consist mostly of loans, they can also own preferred and common stock in companies. This gives them the potential upside of stocks and effectively makes them hybrid credit and equity instruments.

“We made a loan to the company, and we had the honor of getting to know them well and then participating in ongoing conversations about other financing opportunities and, ultimately, in this case, equity investment,” the Blue Owl CEO said of SpaceX.

Another factor: Blue Owl said it expects to maintain a fee-related earnings margin of about 58.5% this year, meaning it is keeping more than half of its management fee revenue as earnings, even in a continued “softer environment” for the industry.

On Thursday’s earnings call, Blue Owl management also noted that although loan-to-value ratios have deteriorated amid the software downturn, there is still a “huge amount of cushion remaining” before losses are seen.

Blue Owl reported strong first-quarter results on Thursday, with fee-related earnings and assets under management rising as the company continues to attract inflows.

While the company’s shares reacted positively after that report, they jumped sharply around 9:49 a.m. EST, during a conference call with analysts.