The Wall Street Skinny sits down with Ron Biscardi, the CEO and co-founder of iConnections, live at Global Alts Miami to get the skinny on what’s happening with fund managers and allocators in real time. Last year, private credit was the undisputed darling of investment strategies. Now, on the heels of Blue Owl headlines and concerns about cracks within the private credit markets, headlines seem to suggest a tough road ahead. But reality is far more nuanced. Ron synthesized both emotional reactions and hard data from investors responding to new perceived stresses in the sector in ways that might surprise you. We also learn where smart money is pivoting, where it remains steadfast, which asset classes and investment strategies stand poised to benefit, and how allocators are positioning for highly volatile markets this year.
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Video
Global Power Shift: China, Tariffs, and the Multi-Currency World
Travis Williamson of Albourne moderated a Global Alts New York 2026 panel on the global power shift reshaping cross-border capital. Zongyuan Liu of the Council on Foreign Relations and Columbia, Daken Vanderburg of MassMutual, and Jackie Rosner of PAAMCO Prisma joined the discussion. The panel walked through the lessons of the 2022 Russia invasion and sanctions regime, the speed of US economic warfare, what central bank gold buying is signaling, and how China, tariffs, and the multi-currency world are now priced into hedge fund and institutional portfolios.
The global power shift is the single biggest unresolved variable in institutional portfolios. Rosner pulled three lessons from the 2022 episode that still drive how PAAMCO Prisma constructs risk today. First, exit liquidity under extreme scenarios matters more than the brochure suggests, which means stress-testing portfolios for tails rather than averages. Second, geopolitical headlines transmit to asset prices faster than they transmit to fundamentals, which forces managers to react in shorter windows. Third, the statistician who drowned crossing a river that was on average three feet deep is the right mental model. The extreme depth gets you, not the average.
What the speed of economic warfare tells us about the global power shift
Liu offered the historical comparison. He has studied many decades of military and economic warfare. The speed at which the United States captured Russian sovereign assets in 2022 was unprecedented and changed how central banks think about reserves. The clearest evidence is in gold. Central bank gold buying has run at multi-decade highs since 2022, and the relative shift away from treasuries toward gold among non-Western central banks is now a structural fact rather than a tactical hedge.
Vanderburg added the wealth management dimension. Client questions have moved from tactical positioning to structural ones about dollar hegemony, sanctions risk for cross-border family wealth, and the durability of US-centric portfolios.
How tariffs and the multi-currency world reshape allocation
Williamson asked the panel to translate the global power shift into actual portfolio decisions. Rosner argued for more global macro and relative-value exposure — policy dispersion across G20 central banks is widening rather than narrowing. Liu emphasized that tariffs are no longer a marginal tax. They are the primary tool of industrial policy on both sides of the Pacific, and the resulting supply chain bifurcation reshapes everything from semiconductor margins to commodity trade flows.
Vanderburg framed the practical advice for wealth clients. Diversify across currencies, not just across countries. Use real assets and hard commodities as a hedge against the policy uncertainty that defines the multi-currency world.
What allocators should underwrite next
The panel closed on the China question. Liu argued that the consensus underestimates how much of US industrial policy is now structured as a direct response to Chinese industrial capacity rather than as standalone domestic stimulus. The global power shift is not partisan in the way Washington framing sometimes suggests. It is bipartisan and likely structural through the next decade.
3 min
Video
Global Macro: AI CapEx, the Fed Reset, and the End of the Post-GFC Regime
Noah Theran moderated a Global Alts New York 2026 panel on the macro regime change now reshaping how capital gets priced. Mark Sullivan of Wellington Management, Brian Friedman of Brevan Howard, and Zachary Squire of Tekmerion Capital joined for a forty-minute working session on AI CapEx, central bank reaction functions, and what comes after the post-GFC playbook stops working.
The post-GFC macro regime is over. Sullivan opened with the framing the rest of the panel built on. Two decades of positive supply shocks gave central banks the luxury of managing demand. That world has flipped to negative supply shocks driven by deglobalization, conflict, and a labor market that no longer adjusts the way the textbook says it should. The Fed has missed its inflation target for five straight years and, until very recently, kept contemplating additional cuts. The macro regime change shows up in that asymmetry, where hikes are treated as bad and cuts as good even when the data argues for symmetry.
Why the macro regime change runs through AI CapEx
The panel pulled AI CapEx out as the single largest swing factor. Sullivan framed it as the most significant economic event of his career, multifaceted and still being underwritten in real time. The order of magnitude matters. Hyperscaler CapEx plans now run into the hundreds of billions per year, and the resulting demand for power, land, water, and skilled labor is reshaping regional economies in ways macro models did not anticipate.
Friedman pushed on the second-order consequence. AI CapEx is partly responsible for the productivity case that has kept growth stronger than most macro forecasters expected. The capital share of income has never been higher. Labor share is falling.
What the Fed reset tells us about the macro regime change
Squire walked through the policy implications. The Fed reset is not just about the next meeting. It is about a central bank that has telegraphed an asymmetric reaction function. Policymakers will support real growth aggressively at the first sign of weakness. They will tolerate above-target inflation for longer than the dot plot suggests. For allocators, that maps to a structural bid for real assets, a higher term premium, and a more durable dollar role than the consensus expects.
Sullivan added the fiscal dimension. The post-GFC regime ran with central banks doing most of the work. The new regime runs with fiscal authorities running large deficits even outside recessions, central banks accommodating the resulting issuance, and a yield curve that has not yet repriced fully for either.
How allocators should position for the macro regime change
The panel converged on practical conclusions. Macro hedge funds are back as portfolio diversifiers because the dispersion across rates, currencies, and commodities is wider than at any point in the post-GFC period. Long-duration assets carry more risk than the consensus prices, particularly in fixed income. Real assets, hard infrastructure, and selective private credit benefit from the supply-side reset. AI-exposed equity remains the highest-conviction beta but increasingly needs to be paired with hedges against the CapEx digestion cycle
3 min
Video
The Chainsmokers’ Alex Pall on Building Mantis VC
Alex Pall, partner at Mantis VC and one half of Grammy-winning duo The Chainsmokers, sat down with Heather Hartnett, CEO of Human Ventures, at Global Alts New York 2026. The conversation walked through how Pall and Drew Taggart turned a music platform with 150 shows a year into a venture firm now writing checks alongside Sequoia and Founders Fund. Pall talked about the partner architecture, why founder access is the only metric that matters, and what the consumer pendulum looks like from a celebrity LP base that includes Tom Brady, Mark Wahlberg, and DJ Khaled.
The celebrity venture playbook has a credibility problem, and Mantis VC has spent eight years engineering around it. Pall told the room that he and Taggart started by asking experienced investors and founders what they wish they had known before raising a fund. The answer that kept coming back was that brand opens the first door, but founders only return calls for partners who actually help. Mantis built backwards from that. Pall and Taggart bring distribution and culture signal. Jeffrey brings six startups of operator reps. Milan brings the traditional venture training. Pall described it as putting the Avengers on a cap table.
How Mantis VC underwrites the celebrity venture playbook
The firm runs a thesis around the consumer pendulum. Pall argued that after a decade where capital chased pure software and AI, attention is rotating back to consumer brands that earn cultural relevance the slow way. The Mantis network on tour, in arenas, and across social platforms gives the partners a real-time read on which products actually break out.
The point Pall hammered is that the celebrity venture playbook only works when the celebrity is one input among several. Mantis writes concentrated checks, runs portfolio support like a platform team, and refuses deals where the founder wants a logo more than a partner. That filter cuts most of the inbound. It also explains why the firm has been able to co-invest into competitive rounds at Sequoia, a16z, and Founders Fund pricing.
What founders actually want from the celebrity venture playbook
Hartnett pressed on the access question. Pall said the most underrated value the firm delivers is talent introductions — specifically to operators who would not take a cold recruiter call but will take a meeting from someone who just played their wedding. He described a portfolio CEO who closed a head of growth in 48 hours through a Mantis intro after six months of pipeline work elsewhere.
The conversation turned to fund size. Pall said Mantis intentionally caps its funds where the math still favors concentrated bets. The team writes a small number of meaningful checks per year, doubles down on the winners with reserves, and avoids the index-fund failure mode that has caught a lot of platform-heavy firms.
The signal Mantis VC reads that other firms miss
Pall closed on what he called the only metric that matters: are you in the best deals. Everything else at Mantis works backward from that North Star, and the partners screen every internal decision against it. The deal that gets passed up because the founder is great but the market is wrong is still a pass. The deal that the partnership debates for two weeks because the founder is unproven but the product breaks something real is still a yes. That discipline is rare. It is also what separates the venture funds that compound from the ones that index.
3 min
Perspectives
June Investment Newsletter: Midyear Checkup
Midyear Checkup: What the Alternatives Market Is Actually Telling Us
Twice a year, iConnections surveys the allocators who attend our Global Alts events. We surveyed over 600 global LPs in total between our Miami and New York events. The two snapshots together tell a more interesting story than either one alone, and the full results will be released in our upcoming Mid Year Global Investor Report.
LPs Surveyed
600+
Global allocators across our Miami and New York events — the largest snapshot we have taken.
60%
plan to increase alts allocation in the next 12 months
84%
flagged the AI supercycle as a top theme, up from 52%
+37
net conviction score for long/short equity, highest across all strategies
The floor under alternatives remains solid. Nearly 60% of New York respondents plan to increase their alternatives allocation over the next 12 months, and fewer than 3% plan to pull back. That number has barely moved in a year. What has moved is everything around it.
The room got more bullish and more anxious at the same time
A year ago, only 5% of New York allocators expected the S&P 500 to gain more than 10% this year. That figure is now 26%. And yet 80% of the same respondents flagged geopolitical events as a top macro concern, up from 61% a year ago. The AI supercycle jumped from 52% to 84%. The mood improved. But the things people are worried about got bigger.
Two cities, one significant disagreement
The sharpest gap between the room in February in Miami and the one in June in New York is on the Federal Reserve’s future moves on rates. In Miami in January, 67% of allocators expected rate cuts in 2026. In New York last month, only 17% held that view, with LPs nearly split between neutral and hikes. These are not differences in emphasis. They reflect genuinely different macro frameworks across two communities of sophisticated investors, with real implications for how each is thinking about private credit pricing and VC valuations.
Net conviction is the number that matters
We asked allocators not just which strategies they wanted to see but which they actively did not want. The gap tells a sharper story than raw interest alone. Long/short equity leads with a net score of +37, multi-strategy at +35, global macro at +29. These are strategies where the room has made up its mind.
Private credit sits in a more complicated middle. Raw interest of 39% looks strong, but 21% also flagged it as not of interest, the highest dual-rejection rate among strategies in the top ten. Private credit managers are not walking into a receptive room. They are walking into a divided one.
What the meeting data adds
Stated interest and actual meetings do not always align. Real assets and infrastructure punched at 1.5x its fund representation. Global macro generated nearly twice its meeting share relative to fund presence. Venture capital, the most represented strategy by fund count, punched slightly below its weight. A favorable macro environment does not automatically translate into meeting volume. Conversion depends on how the room is composed and how precisely a manager’s positioning matches the mandates across the table.
Coming Soon…
Midyear Global Allocator Report 2026
In the meantime, explore our previous volumes while you wait.
Joseph Magazine, Commissioner of the City of Miami Beach, joined Justus Parmar, Founder and CEO of Fortuna Investments, and Michael Simas, President and CEO of the Florida Council of 100, at Global Alts New York 2026. The three spent the session unpacking the Florida shift: why hedge funds, private equity, and family offices have moved meaningful capital and staff to the Gold Coast, what is structural and what is cyclical, and what New York allocators should actually price into their assumptions. Citadel, Millennium, Bailey, and Wells Fargo’s wealth business all came up by name.
The Florida shift is no longer a tax story. Magazine, who started his career on the Merrill Lynch structured credit desk before public office, told the room that the ecosystem now accompanies the migration in a way it never did in earlier cycles. Wealthy individuals always summered in Florida. What changed over the last six years is that firms moved their full org charts. Orlando Bravo did not just relocate. He brought the senior partners, the vice presidents, the associates, and the analysts. Citadel, Millennium, and Bailey did the same. Wells Fargo moved its entire wealth business to the southeast. The Gold Coast across Miami-Dade, Broward, and Palm Beach now sits on a $600 billion economy with a financial services ecosystem that did not exist a decade ago.
What is structural about the Florida shift
Parmar ran the lifestyle and logistics case. Zero state income tax matters at the margin. Proximity to South America, Europe, and New York matters more once a firm is operating across multiple time zones. The thing that surprised him during the Covid period was the accommodating posture of state and city government, which translates into permits, schools, and infrastructure decisions moving on quarter-by-quarter timelines rather than annual ones.
Simas layered in the macro. The Florida Council of 100 represents 200 statewide CEOs working on infrastructure, housing, water, and transportation at the policy level. Ken Griffin and Steve Ross gave the council $10 million this year specifically to correct what Simas called the perception gap that still exists in New York and California about what it actually takes to scale a business in Florida.
Why the Florida shift matters to hedge fund allocators
Magazine took the talent question head on. Hedge fund staffing in Florida still skews to back office and securities operations. Investment professional headcount is real but lower than the headline news cycle suggests. The reason is that pure portfolio talent moves slower than ops talent. The Florida shift on the investment side is happening at the senior level first, then through new hires, and only at the margin through bulk relocation of existing books.
Parmar pushed back gently. The dichotomy of visions across US cities is real. Capital concentrates where it is not penalized, and Florida has been deliberate about staying business-friendly without giving up the basics of public safety, cleanliness, and quality of life.
How LPs should underwrite the Florida shift
Simas walked through the policy work. Florida passed one of the largest affordable housing laws in the country, putting three quarters of a billion dollars into workforce housing. Bright Line is moving mass transit from Miami through Broward and Palm Beach into Orlando. The investment takeaway is that the Florida shift now affects manager selection. GPs with Florida offices, Florida-based portfolio operations, and Florida-resident teams will price differently than the same strategy headquartered elsewhere.
3 min
Video
The IPO Window: Inside the Largest IPO in History
Bloomberg’s Natalia Kniazhevich moderated a Global Alts New York 2026 panel on the SpaceX IPO. The session explored the broader IPO window opening for the highest-quality private growth companies. Paul Abrahimzadeh, partner at 1789 Capital and one of the largest holders of SpaceX through eight tranches, walked through the underwriting case for the largest IPO in history. Stéphane Gruffat of Deutsche Bank ECM joined from the capital-markets side. Legendary short-seller Jim Chanos provided the bearish counterpoint in a separate fireside with the same moderator. Together, the sessions delivered the most complete bull-bear framing of any IPO event in recent memory.
The IPO window has reopened, and the SpaceX print is the headline trade. Paul told the room the deal is roughly four times oversubscribed. It enters Friday with around $30 trillion of total addressable market across three subsidiaries that each clear $1 billion in revenue. Notably, Starlink supplies 60% of revenue today with durable cash flow. Meanwhile, AI takes 60% of CapEx today, with sell-side underwriters modeling 100% revenue compound annual growth over five years that would take the business from $20 billion of revenue to $1 trillion.
Why the IPO window is structural, not seasonal
Paul made the structural argument. The IPO window has opening because the highest-quality private companies have aged into a stage where the private market cannot absorb them efficiently. In particular, OpenAI’s $120 billion private raise was, by his framing, the largest equity capital markets transaction in history. As a result, the public market is the only venue with the depth to clear what is queued up behind SpaceX.
Gruffat ran the historic comp. Alibaba was a 20-times oversubscribed $25 billion IPO a decade ago, implying roughly $500 billion of demand. Similarly, SpaceX approaches that order of magnitude on a single Friday print.
The bearish case: Jim Chanos on the IPO window
Chanos offered the bluntest read in the room. “This is really a hopes and dreams IPO,” he said. Even so, the company is valued at close to $2 trillion on $19 billion of revenue with negative free cash flow. He compared the premium being paid to Elon Musk’s involvement to how Tesla trades. That stock commands a massive premium to the underlying car business based on promises of robotics and full self-driving. “Space is coming at roughly 90 times revenues. Bull markets put a premium on promises. Bear markets put a discount on reality. Right now we’re clearly in the former.”
What allocators should price into the IPO window
Paul listed three risks investors should price. To start, the first is execution: SpaceX has to hit an unprecedented 100% compound annual revenue growth rate over five years. The second is the cap table — Facebook has delivered roughly 20% total return CAGR since its IPO; By contrast, Uber has compounded around 6% per year. Both had deep private cap tables. Therefore, the IPO window does not guarantee post-IPO returns. The third is plumbing: SpaceX will likely trade $30 to $50 billion or more on day one, unprecedented single-ticker liquidity that will test index-inclusion rules.
3 min
Reports & Data
LP Appetite for Digital Assets: A Market Divided
Digital Assets: A Market Divided
The LP community isn’t neutral on digital assets. It’s splitting in two. Based on 20,000+ meetings and 1,200 surveyed LPs, here’s who’s moving in and who’s pulling back.
Gated and Confused: Private Credit at an Inflection Point
Ted Seides of Capital Allocators moderated a candid Global Alts New York 2026 panel on the private credit reset. Terry Monis, co-CIO of $8B Los Angeles multifamily office ICG Advisors, joined Tod Trabocco of StepStone Group and Jonathan Berger, co-head of credit at $25B Third Point. The three allocators and managers worked through the gap between headline anxiety and asset-level reality, the 150 basis point move in direct-lending spreads over 90 days, and the question every LP is asking right now: which managers actually survive when valuations finally reprice
The private credit reset is no longer a forecast. Berger opened with a number: spreads on regular-way core direct lending have widened 150 basis points in the last three months, with capital solutions pricing now running 800 to 1,000 over plus equity kickers on deals that priced at 650 to 700 a year ago. Trabocco framed the same move differently. He told the Global Alts New York room that institutional LPs do not recognize the gating headlines. They read them, they understand the structural pressure on the perpetual BDCs, but at the asset level the stress is not what the retail-channel narrative suggests.
Why the private credit reset is a correction, not a crash
Monis argued the asset class is not unwinding. It is going through the first real test of a cycle that ran almost entirely through zero rates. “There will be a shakeout,” he said. Marginal GPs and marginal fund managers will exit. People will lose money. The quality managers will prove resilience and prove they can generate returns. He pushed back on the doom narrative without dismissing it, which is how the panel earned trust with the LP audience it was speaking to.
Trabocco delivered the line that frames the entire debate. The panel is not talking about a crash. It is talking about a great disappointment. A lot of people were sold a product. A lot of people are going to be greatly disappointed because the funds they sit in are now on the back foot, locked into vintages that need to fund redemptions and cannot lean into the more attractive deals showing up today.
The vintage problem inside the private credit reset
Berger pointed to 2021 as the source of most of the stress now surfacing. Flows surged into perpetual structures during zero-rate post-COVID conditions, deals got done at valuations and structures that should not have cleared, and the correction underway is mostly a vintage problem rather than an asset-class problem. Default rates are rising, recoveries are coming down, and spreads are widening, but institutional capital is still allocating. The reset is healthy. It just punishes the wrong vintage and the wrong structure.
Trabocco added a useful frame for allocators trying to underwrite GPs through the current dispersion. Most people think lenders want companies whose EBITDA climbs in a straight line. That is actually the second least desirable loan. The one nobody wants is the cliff. The one most lenders should want bounces along. The reframe matters because much of the panic narrative assumes lenders need growth to be paid. They do not. They need coverage and collateral, and they need workout experience when neither holds.
What allocators should actually underwrite
Monis returned to the experience question. His shop screens for managers with workout reps, with the elbows to sit in the trenches when a credit goes sideways, and with gray hair. A large share of capital deployed into private credit over the last cycle is run by people who have never seen a full credit cycle, COVID excepted. That is the operational risk the headlines miss.
Berger closed by separating valuation risk from credit risk. A software portfolio company can see its valuation cut in half and still cover interest, still preserve EV coverage, still trade through a refinancing. Lenders have levers. They can pay down a portion, take an equity slice, restructure into a second lien. The mechanical “we take the keys” outcome is one path of many.
The panel did not pretend the reset is over. They argued it is bifurcating. The marginal product gets disappointed. The quality book gets paid. For LPs, the work now sits in manager selection, workout track record, and vintage discipline.
4 min
Perspectives
When Tail Risk Makes You Rich
On conviction, models that miss the moment, and the LP question almost nobody answers right.
If you knew you could walk away with $33,000 by betting $100, would you? Would you double or triple down on a leader who faces bankruptcy, but could earn you billions?
Last week, two of them paid off. One overnight. One 20 years in the making. Both tell us a lot about conviction.
If you bet on the Knicks when they were down 29 points with Game 4 of the NBA finals slipping away, just before OG Anunoby tipped in the winning basket with 1.2 seconds left.
Odds of that happening? Less than 1%. Biggest comeback in NBA Finals history.
SpaceX? Going public at an expected $1.7 trillion valuation after more than one near-death experience. The dedication of those who stuck with it, whether engineers or investors, is minting millions.
When Models Get It Right, and Still Miss Everything
Nobody eyeballed the Game 4 Knicks win. Odds come from models that learn from thousands of scenarios and made best guesses, basically the same way we model portfolio risk.
They look precise and they feel authoritative.
But the Spurs went from the best shooting half in Finals history to bricking everything in sight in about twelve minutes. No model built on normal behavior sees that coming.
In 2008, SpaceX struggled with three consecutive rocket launches. Tesla was days from bankruptcy, and many told Elon Musk to let one company die to save the other.
But Antonio Gracias, a leading investor, did the opposite. He lent Musk money, kept investing in SpaceX through the failures, joined both boards, and never stopped adding capital when everyone else was heading for the exits.
The LP’s Hardest Question: When Do You Add Capital
Gracias wasn’t just right once. He kept being right by doing the thing most investors cannot bring themselves to do: adding capital when everything looks broken.
Most LPs pull out when a manager has a bad year, if the thesis seems wrong and the numbers get ugly. If others are redeeming, it can feel like the responsible move.
Mark Spitznagel at Universa Investments spent years buying options that expired worthless whenever markets were calm. Some were skeptical through years one, two, and three. But for those who stayed, or added, got a 4,144% return in a single quarter when COVID hit in March 2020.
Spitznagel hadn’t predicted COVID, he had just spent years refusing to treat catastrophic risk as zero, absorbing the cost of being early, and waiting for the moment everyone else was unprepared for.
Gracias didn’t just invest in Musk once and wait. He kept going back through the Tesla near-bankruptcy, three SpaceX explosions and every moment the model said this thing is finished.
That’s the move many LPs cannot make. When a manager is down in year two or three, the instinct is to pull capital. The quarterly statement is ugly. The thesis looks broken. Everyone else is redeeming. So you think about redeeming.
The pattern is similar every time. The manager looks wrong. The bet looks stupid. Most people leave. A few stay, or add. That’s where the money is.
OG’s (Anunoby’s) tip-in. AG’s (Gracias’s) checks. Spitznagel’s years of patience.
None of them required predicting the future, but all of them required staying in the game when the model, the crowd, and the quarterly statement said get out.
A less than 1% doesn’t mean impossible, but it does mean almost nobody is prepared for it. That gap is where the money is.
3 min
Video
Seth Klarman on Investing in the AI Era: Why Baupost Is Long Raw Land, Assisted Living, and Patience
When a manager has compounded for 44 years with only five down years — the worst being a single -10% — the question isn’t whether to listen. It’s what to actually take away. At Global Alts New York 2026, Seth Klarman, founder and CEO of Baupost Group, walked through how his firm is positioned for what he called a market with “characteristics of a bubble” — without retreating to cash or capitulating to the AI trade.
The most useful thing Klarman did on stage wasn’t predict a top. It was articulate the discipline that allows a value-driven firm to underwrite a market this uncertain.
Bubble Characteristics — Without the Easy Call
Klarman did not call AI a bubble. He called the environment bubble-adjacent. “It has characteristics of a bubble,” he said. “Optimistic tone around a transformational technology. New-era thinking.” His tell: Allbirds, a shoe company, added “AI” to its name and the stock went up.
But he was equally careful on the other side. “AI seems like a technology that could be so game-changing that it would be hard to dismiss it or call anything in particular around it a bubble.” The hard part isn’t the technology — it’s the multiples. Winner-take-all or not? Which companies actually win? At 40x or infinite multiples, investors are being asked to underwrite a very distant future. “None of us can know with any confidence.”
Direct AI Exposure: ~10%, at Sensible Prices
Roughly 10% of Baupost’s book is in companies that directly benefit from the AI rollout — but only at multiples Klarman is willing to defend. Amazon and Alphabet were the named examples: AWS exposure at the former, internally designed chips plus AI surface area at the latter.
His operating principle around entry timing: “You don’t have to buy them every day. There are blips in almost every company where you get windows of opportunity.”
The Optionality Play: Raw Land Adjacent to Power
The position that may travel furthest from this session is Baupost’s investment in raw land adjacent to power infrastructure — sites that could become data centers. Crucially, Baupost is not planning to build. The two criteria Klarman named were political permitting and access to power; the structure is pure optionality at the land basis.
Internationally, the firm took a private position in non-China Asia data centers, acquired via a spinout at roughly a 40% discount to public market multiples. Same theme, very different entry point.
What AI Won’t Touch — The Quiet Long Book
This was the section that should resonate with allocators thinking about long-tail equity exposure inside their alternatives sleeves. Klarman described what he called “AI agnostic” businesses: roofing, housing supplies, travel infrastructure — companies whose end-demand and operating model are not at meaningful risk from large language models. “People aren’t paying attention,” he said, “and the price is drifting lower.”
The mirror trade is in credit. Klarman is looking at perceived “AI losers” — software-related credits getting clobbered, trading at very low cash flow multiples. “At least something to take a look at.”
Private Credit Opportunities 2026 — Idiosyncratic, Not Systemic
Klarman is not calling a credit cycle. But he is seeing more idiosyncratic distress — a Brazilian corporate restructuring, a large PE deal with impaired debt and an exchange offer that has left mispriced securities behind. His framing of why credit dislocates well: “Credit is inherently interesting because of the transition of ownership. When bonds get downgraded, people dump. When they file for bankruptcy, people dump. Even distressed funds eventually move on — and new capital is needed.”
He believes the market is “due for a credit cycle” without forecasting the timing. For LPs underwriting private credit opportunities 2026, that’s a useful distinction — between cyclical positioning and idiosyncratic deployment.
Commercial Real Estate Distressed — The Top Conviction
The single highest-conviction idea Klarman shared was assisted living. Post-Covid, many newly built facilities couldn’t reach occupancy and a wave of bankruptcies followed. The system, he said, is starting to clear.
His broader commercial real estate distressed framing was equally direct. “The logjam is starting to break. Fundamentals are starting to improve. We’re seeing opportunities to deploy capital at significant discounts to replacement cost with very attractive returns — no heroic assumptions.” Industrial land, warehouses, and cold storage — all driven by the onshoring trend — were called out as areas of continued demand. His structural advantage: “I love being below the radar of the big gorilla firms.”
The Macro Overlay
Klarman did not hide his concern on US debt — 100% of GDP, $2T+ structural deficits, a path to $50T in five years. He flagged the Strait of Hormuz as underpriced, with storage drawn down quickly and oil potentially at $150+ if it closes for months. He framed the AI build-out as a growing political and NIMBY risk at the local level. On the Fed: he expects patience — one or two hikes are possible, but a cut is the preferred path.
The Takeaway
Klarman’s framework in one line: in markets this uncertain, the work is to own what you can underwrite, leave optionality where the upside is asymmetric, and let the rest of the market provide the entries. Value investing alternatives AI era isn’t a style box — it’s a discipline about what you’ll pay for confidence.
Sessions like this one are why allocators continue to use iConnections to find managers operating with this kind of clarity. Global Alts New York 2026 brought together the firms underwriting the same market from very different angles — Klarman on the long side of what AI can’t touch, Chanos on the short side of what’s being overpaid for around it
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