Walker Webcast: Blue Owl’s Marc Lipschultz Discusses Alternative Assets, Capital Markets and AI During the 150th Episode

On July 26, 2023, the Walker Webcast hit a milestone of 150 episodes. Launched during the COVID-19 pandemic to provide news and information to Walker & Dunlop clients, Walker & Dunlop Chairman and CEO Willy Walker said that the events typically attract an audience of 70,000-100,000 and generate more than 8 million views.

The guest was Marc Lipschultz, co-founder and co-CEO of Blue Owl Capital Inc. He and Walker discussed how and why Lipschultz founded Blue Owl with Co-Chief Executive Officer Doug Ostrover. Other topics discussed included the types of alternatives with which Blue Owl is involved, how ongoing rate hikes impacted Blue Owl’s senior secured floating rate debt and even ownership of sports teams (Lipschultz is a limited partner in the Washington Commanders ownership group).

One question Walker asked was Lipschultz’s views on the growth of private equity-owned companies versus publicly traded ones. Lipschultz responded that this trend speaks to the evolution of the U.S. capital system.

“We’ve developed a private market that is, in many cases, superior for long-term planning,” he explained. “I think people select the private markets because there is an ability to plan longer, think longer, and operate longer horizon in terms of strategy and business.”

Meanwhile, the public markets provide wider access to capital. “There’s other advantages there, in the currency that you can create and the durability you can build,” Lipschultz said. “I look at this as broadening the choice as opposed to stating that one or the other is the answer for all purposes.”

Speaking of those purposes, Lipschultz indicated that even with Blue Owl’s global nature, the company focuses on alternative assets predominantly in the United States. “Our DNA is about risk management, reduced volatility protection of principal preservation and durability,” he noted. “With that, the U.S. market is frankly a very strong place to be.” He cited the United States’ innovative market, innovative and resilient economy and system that protects investors’ rights as reasons.

Walker and Lipschultz also discussed artificial intelligence and its implications for some of Blue Owl’s software and technology holdings. On the one hand, he commented that the software and technology companies “are frankly in the best spot to adopt the beneficial aspects AI and deliver it to that customer base.”

On the other hand, AI has every indication of being disruptive. “Someone might be the victim of change as opposed to the beneficiary,” he said. “But so far, it looks like something that will be an adopted tool and helpful to the software business.”

The webcast took place hours before the Federal Reserve raised the Effective Federal Funds Rate (EFFR) by 0.25 percentage points, bringing the benchmark overnight interest rate to 5.25%-5.50%. Lipschultz made two observations when asked where rates could end up. First, inflation is tough to bring down. “Inflation does not go away easily,” he commented. “Full credit to the Fed, we seem to be making progress, but it’s not easy to take your foot off that brake.”

And second, unlike fears from a year ago when EFFR hikes started coming fast and furious, recession doesn’t seem as probable. “This doesn’t mean that we’re technically not going to be in one,” Lipschultz said. “But it doesn’t look imminent.”

On-demand replays of the July 26 Walker Webcast are available on the series’ YouTube channel.