The Compound and Friends Private Credit Is the Fuse, Insurance Companies Are the Bomb with Nick Nemeth
65 snips
Apr 6, 2026 
Nick Nemeth, writer of Mispriced Assets who digs into hidden risks in private credit and insurance, breaks down why private loan valuations can be misleading. He explores manager-marked NAVs, concentrated software and sponsor risks, refinancing fragility, and how life insurers and reinsurers could amplify trouble. Short, sharp, and investigative conversation about sources of systemic vulnerability.
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Manager Marking Hides Private Credit Volatility
- Private credit valuations look artificially smooth because funds are manager-marked rather than market-marked.
- Nick Nemeth highlights software loans as an example where sponsor-marked EBITDA and optimistic assumptions hide downside risk in the same companies hurting public equities.
Aggressive Underwriting Across Private Credit
- Underwriting across private credit is aggressive with seven times leverage on sponsor-marked EBITDA and optimistic add-backs.
- Nemeth warns these deals often miss year-one and year-two EBITDA targets by 25–50%, inflating NAVs across sectors beyond just software.
Favor Public Discounts Over Private NAV Blindness
- Prefer transparent instruments over private versions when NAVs diverge; public BDCs often trade at a meaningful discount to related private funds.
- Nemeth points out BXSL trades ~12% discount despite ~80% overlap with Blackstone's private loans.