Opinion
Lewinsohn: Direct lending shifted from overhyped to underrated
“Direct lending, which is a big part of what we do now, got very hyped up. Everyone's saying, oh, you have to do it, whether it's allocators, investors, GPs. And now has gone all the way to the point that people are so afraid of it. They miss what's great about…”
Insight
Lewinsohn: Software concentration is the biggest threat to direct lending portfolios
“The biggest threat is industry concentration in software going to impact portfolios in a way that wasn't expected when they were under it.”
Prediction Open · timeframe Dec 2030
Lewinsohn: Chinese expansion will drive severe chemical market overcapacity by 2030
“If you look at the amount of ethylene and propylene that they're bringing on, and then go to 20 30 and shut all of the European and Japanese capacity, in 2030, you'd have more over capacity than you have now.”
Opinion
Lewinsohn: Wall Street is running out of places to hide credit residuals
“We think that Wall Street is getting a little short on places to stick the stumps. They're coming up in special situations funds. They're coming up in interval funds. They're coming up in places that people may not appreciate what happens when you're not getti…”
Prediction Not checkable as stated
Lewinsohn: Private asset-backed risks will hurt specific funds, not the global economy
“I don't think that it would create systemic problems. Just like every hedge fund in the world wants to call a recession constantly because they're desperate for the volatility. Everyone wants to constantly say, what's the next systemic thing? Because the impac…”
Opinion
Lewinsohn: 'Good company, bad balance sheet' distressed opportunities rarely exist anymore
“And frankly, and this is part of why we do a lot more than distressed at diameter, really kind of the secular decline of the distressed debt industry. Because if you think about what makes distressed interesting is you want to buy a business that's going throu…”
Insight
Lewinsohn: Outside recessions, most distressed companies are fundamentally bad businesses
“And we think that most companies that end up in distress outside of recessions are bad businesses. And generally investing in bad businesses is not a good business for you.”
Insight
Lewinsohn: Buying low-quality distressed debt early in market sell-offs is a mistake
“Our view is at the beginning of a sell off, the worst thing you could do is buy the lowest dollar price, crappiest companies. If you were a company that traded, let's say you were an oil company that was trading at 75 in January of 2020 and was trading at 25 i…”
Assertion Supported
Lewinsohn: Software accounts for 30% of direct lending portfolios
“You do have 30% of direct lending in the software space.”
Opinion
Lewinsohn: AI agents make too many errors for enterprise prime-time deployment
“Agents are working well doing a lot of things, but they're 98%. They make mistakes. AI's not there yet for prime time, so we can't predict where it's going to go.”
Insight
Lewinsohn: Hyperscaler-guaranteed amortizing debt is the data center gold standard
“The gold standard is financing a box, a data center that is being used by a hyperscaler, being guaranteed by a hyperscaler that amortizes.”
Assertion Not checkable as stated
Lewinsohn: Non-discretionary moves drive 3 million of 4 million annual home sales
“We think that the non-discretionary moves are about three million of the four million. Which means we only have a million homes per year where people are saying, hey, I got a better job in Cincinnati. I'm taking it.”
Opinion
Lewinsohn: Credit Hedge Funds Mistakenly Try Playing Private Equity Turnaround
“We think that too many hedge funds who did credit thought that all of a sudden they were in private equity and they can improve businesses. We don't think that that's our skill set. Frankly, we think if we think we can improve it probably means that other peop…”
Insight
Lewinsohn: Hedge funds must trade volatility, not absorb it
“A hedge fund at its core is not supposed to absorb volatility. It's supposed to be able to trade volatility and make money even in periods of volatility.”
Assertion Supported
Lewinsohn: Fed actions created the first syndicated rescue market in 2020
“Instead you had the first ever syndicated rescue market where thanks to the fed banks brought rescue deals for companies to sell to mutual funds and hedge funds.”
Insight
Lewinsohn: Central bank intervention shortens distressed debt cycles
“Now I think people who work at central banks want to avoid recessions really at all costs. And that means they throw everything at it to avoid it. And when we're in it, we just saw unprecedented act after unprecedented act. So cycles are short. So you're not g…”
Disclosure
Lewinsohn: Diameter views short positions as profit centers, not hedges
“And so our portfolio, we don't really think about shorts as hedges. We think about them as ways to make money in companies that no longer make money the way they used to.”
Opinion
Lewinsohn: Public sentiment polls are completely irrelevant for investment decisions
“And what it really impacted for me is polls are not really relevant. In COVID, for example, we'd get all these polls, oh, people can't wait to return to cruises, or people are not going to go back to the office. I didn't pay attention to it at all.”
Assertion Supported
Lewinsohn: Leveraged loan quality dropped as high yield quality improved
“As high yield has become higher quality, levered loan market is often lower quality.”
Assertion Supported
Lewinsohn: RSA, Ivanti, McAfee, and Barracuda face syndicated loan distress
“RSA, Avanti, McAfee, Barracuda, they'll have their own issues going through LME.”
Assertion Supported
Lewinsohn: Hertz's post-bankruptcy crisis stemmed from Tesla residual value collapse
“Hertz had a problem coming out of their restructuring that they had too many Teslas. It wasn't only that people didn't want to rent Teslas. I think people found Tesla's interesting to rent. They're great cars. The problem was the residual value was much worse …”
Insight
Lewinsohn: Distressed debt's best opportunities come from sector microcycles
“What it means is the best opportunity for distressed has been micro cycles.”
Assertion Partly supported
Lewinsohn: US consumers and corporates have been historically under-leveraged
“Part of the reason we've been more bullish on the economy than some others over the last few years is the U.S. Consumer and the corporate have been historically under levered.”
Prediction Not checkable as stated
Lewinsohn: US housing market is a coiled spring that must rebound
“We see housing as this coiled spring. It has to come back. There has to be more dynamic movement in the housing market.”
