Blue Owl Technology Finance: The Current Price Implies Half The Portfolio Defaults, Strong Buy

Blue Owl Technology Finance Corp. trades at a 39% discount to NAV, despite stable or improving credit metrics and minimal non-accruals. OTF's NAV decline was driven by mark-to-market losses from credit spread widening, not realized credit deterioration; realized gains offset much of the impact. Dividend coverage remains a soft spot, but spillover income, low leverage, and wider spreads on new originations provide a multi-quarter earnings cushion. Buybacks at deep discounts, lock-up expiration, and conservative fair value estimates support 34-44% upside plus a mid-teens yield for patient investors.

In late February, I wrote that Blue Owl Technology Finance Corp.'s (OTF) discount to NAV was way too large relative to the risk. The stock was $11.62 then, or 67% of net asset value. Five months later, the stock ...