The 100 Baggers Club

Over the past decade and half, 25 listed companies have gained 100x or more in value in the U.S. and Europe. The top performer was XPEL, a Texas-based firm that specializes in automotive surface protection and window tint solutions. XPEL, founded in 1997, has returned 1,182x (i.e., a $100 investment would have grown to $118, 200!). Number two was Patrick Industries, the Indiana-based supplier of parts for RVs and mobile homes, returned 654x. Both XPEL and PATK are relatively tiny companies with market capitalizations of $1.1 billion and $3.0 billion, respectively.   

Source: Thierry from arvy; Syz Group (blog.syzgroup.com). (Note, growth as of April 3, 2024)

Interestingly, this list also includes two of the world’s biggest companies NVIDIA and Netflix. NVIDIA, now the largest company in the world with a market cap of $5.5 trillion, has soared in value by over 31,000%! Fifteen years prior it was still a relatively large ~$18 billion company making this growth all the more remarkable.

                                                                                    

Source: Yahoo Finance and Mantabye. Click to enlarge. 

There are other interesting breakdowns. While most of the firms above are 20-40 years old, the oldest is over 150 years. German biopharma Sartorius was founded way back in 1870 and it's time to be a growth stock finally arrived! Not surprisingly, nearly half of the companies (11) are in tech; four hardware-focused (NVIDIA, Entegris, SMCI, and Besi) and seven software-oriented. Other sectors represented include industrials (5), health care (3), consumer discretionary (3), consumer services (2), and real estate (Sagax). Similarly, more than half (14) are based in the U.S., followed by Europe (9). Finally, based on the most common categorizations of market cap, 23 of these companies were either micro or small-cap companies when their remarkable growth started. Forward 15 years, eight had graduated to mid-cap status, ten to large-cap status, and two (you know who) became mega caps. One, AVIS, also became a meme stock--which certainly has helped its return.

In hindsight, investing in NVIDIA, Netflix, Super Micro, etc. seem pretty obvious. But it's worth remembering there are tens of thousands of publicly traded companies at any given time. Just 25 returned 100x (over the sample period). Good luck finding them! Compare that to the odds hitting the jackpot in private markets. Venture capitalists argue that the most successful companies' growth happen before they go public (which is why you should, naturally, give them your money!). But even VC returns are highly skewed; their 'spray and pray' approach means perhaps only 1 in 40 investments may return a10x, let alone a 100x. So, if you happen to have invested in any one of the above companies in the past 10-15 years, then you've done:
  

Iran War Pressuring U.S. Workers

The consumer price index rose 3.8% year over year in April 2026, up from 3.3% in March, according to the Bureau of Labor Statistics. The inflation rate is now at a three-year high. The main driver was surging energy prices driven by the war in Iran. In particular, gasoline prices jumped over 28% y-o-y! The chart below shows all the components of CPI and their changes annual % change. 

Source: CNBC and the Bureau of Labor Statistics. As of April 10, 2026.
 

The rise in inflation is squeezing American households whose wages have increased by only 3.6% over the same period, as shown below. Wage growth had been gradually declining over the past few years, but still outpaced inflation improving Americans' purchasing power. Now for the first time in three years, American workers' paychecks are lagging behind inflation--a casualty of the Iran war. Per Axios, workers are now "earning less in real terms which is a threat to the spending that has kept the economy humming." 

Source: Axios and the Bureau of Labor Statistics Click chart to enlarge.

Polls show rising bipartisan frustration with the rising cost of living and deep dissatisfaction with President Trump's policies. 70% of Americans now disapprove of his handling of the economy, which is significant given that Trump’s 2024 victory rested heavily on a promise he could better manage the U.S. economy than Biden/Harris, particularly with respect to the cost of living. But President doesn't seem to have gotten the message yet:

What's In the Price of a Gallon of Gas?

According to AAA, the national average for the price of a gallon of gasoline in the U.S. was $4.55 on May 7, 2026, up 25 cents for the second week in a row. Tensions in the Middle East and the closure of the Straits of Hormuz continue to drive prices up. Pump prices are now $1.40 higher than they were a year ago and at their highest level since 2022, when a combination of a supply shock from Russia's invasion of Ukraine and a demand surge in the form revenge travel among Americans caused gasoline prices to briefly hit $5 a gallon during peak driving season.

The chart below compares gas prices over the past few years. While we're still a little way yet from the $5.00 a gallon milestone, prices were also higher coming into 2022 at $3.28 a gallon. So, by June of that year when prices hit $5 a gallon, the cost of gasoline had risen by 53%. Coming into 2026 gas prices were substantially lower at $2.81 a gallon. That means the cost of gasoline has risen over 60% YTD, even before we get into the peak driving season (June-August). Yikes!

Source: AAA. As of May 7, 2026.

So, what contributes to gas prices? The Naked Capitalism blog had good piece by energy economist Robert Harris that breaks down the components of gas prices and their drivers. As shown below, just over half of the cost of a gallon of gas/diesel is driven by the price of crude oil, which can fluctuate substantially. Oil is a global commodity, so when prices rise in one place, they rise everywhere--even if the U.S. produces most its own oil today. The rest of the costs (refining, marketing, and taxes) are more stable. 

From Harris: "Because the price of crude oil is the largest element, most of the price at the pump is derived from the global oil market. Usually, big swings in crude prices come mainly from shifts in global demand...But what is happening [today] with the war in Iran is one of the exceptions: a classic supply shock. Severe disruptions to shipping through the Strait of Hormuz and attacks on Middle East oil infrastructure have taken millions of barrels a day off the global market..."

Since most people can’t quickly reduce how much they drive or how much gas they use when prices change, gasoline demand doesn’t change much in the short run. That means a jump in crude costs tends to result in people paying more rather than driving less...

Source: Robert Harris, The Conversation CC-BY-ND, and eia.gov.

Refining crude into gasoline at industrial scale is another cost. As Harris notes, the U.S. doesn’t have a single gasoline market. But "roughly a quarter of U.S. gasoline is a cleaner-burning blend of petroleum-derived chemicals called 'reformulated gasoline' which is required in urban areas across 17 states and the District of Columbia to reduce smog. California uses an even stricter formulation...and is also geographically isolated: No pipelines bring gasoline in from other U.S. refining regions." Which is why, along with taxes (discussed below), a gallon of gas cost $6.16 there on May 7.

"The distribution and marketing category covers the costs of everything involved in getting the gasoline from the refinery gate to your tank. Gasoline moves by pipeline, ship, rail and truck to wholesale terminals, and then by local delivery truck to service stations. At the retailer’s end, the key factors are station rent and labor, the cost to buy gasoline in bulk to be able to sell it, credit card fees of as much as 6 to 10 cents a gallon at current prices, and franchise fees paid to the national brand, such as Sunoco or ExxonMobil, for permission to put their branding on the gas station. Most gas station operators net only a few cents per gallon on fuel itself – which is why many gas stations are really convenience stores with pumps out front."

Last, but not least are taxes. The federal government charges a tax on fuel, of 18.4 cents a gallon for gasoline and 24.3 cents a gallon for diesel. States charge their own taxes, ranging from 70.9 cents a gallon for gas in California to 8.95 cents in Alaska.  

"When gas prices rise, many politicians talk about temporarily suspending their state’s gas tax... Research suggests that consumers usually get about 80% of the reduction in gas taxes. That means oil companies and fuel retailers keep about one-fifth of the tax cut for themselves rather than passing that savings to the public."

The result is that the price that drivers see at the gas station mostly reflects the global price of crude oil and that there is not much anyone can do anything about it in the short-term to medium term. And oil prices don't seem to be coming down...

Source: St. Louis Fred and Mantabye. As of May 5, 2026.

El Barça, Campeón de Liga

Felicidades Barcelona!!! 

Barça shut out archrivals Real Madrid 2-0 to clinch the LaLiga title yesterday in another memorable El Clasico! It was Catalan team's third league title in four years (2022-23, 2024-25 and 2025-26 campaigns). For Real it was a disappointing week and year. The venerable club has now gone two consecutive years without any trophies (in Spain or Europe). The last time this happened was the 2004-06 period and before that 1983-85...so every 20 years or so; I'm sure they'll bounce back. But this was truly Barcelona's year once again. The team won 42 of 53 games, including 100% of all home games and a remarkable stretch of 11 consecutive victories. Under Hansi Flick Barça has dominated Spanish football of late winning 5/6 domestic trophies over the past two years. Hopefully more to come! Highlights of the Clasico here:

Barcelona has now won 29 Spanish league titles to Real Madrid's 36. While the Los Blancos lead overall, Barcelona has won twice as many La Ligas (20 to 10) since the late eighties when Johan Cryuff took over (see chart below). The Dutch legend implemented and expanded Total Football that changed Barcelona forever. Of course, it helped they had some great players too: Ronaldo, Figo, Xavi, Iniesta, Neymar, Messi, Messi, Messi, and now Yamal. 

                                                                           Source: Topendsports and Mantabye. 

It's worth noting the domination of the Barca and Real in Spain. Of the last 35 title campaigns 30 were won by the former two. Though that type of supremacy seems to be a feature of European football (e.g., of the last 32 seasons in the EPL, 21 titles went to city of Manchester: 13 to Man U and 8 to Man City). But that's for another post! For now, Barcelona son los campeones de España!!

Avis: To the Moon...and Back

Remember Melvin Capital during the pandemic? When day traders, leveraging social media, took down a massive $12.5 billion hedge fund. (They even made a decent movie about it). Meme stocks--those struggling, but nostalgic, small cap companies that suddenly surge in value because...(insert arbitrary reason here)--helped democratized the stock market and gave power to retail investors to compete with big institutions (sort of). So, we love them. Well, a couple of weeks ago, there was another meme stock rise and fall frenzy involving the 80-year old car rental company Avis that's also a cogent tutorial on the mechanics of 'short squeeze'.

The Avis Budget Group, which lost nearly $1 billion last year and carried more than $6 billion in debt on a market cap of $4.5 billion, soared more than 740% in April...before plummeting ~70% in 26 hours. It wasn't the first time Avis stock has gone parabolic. As Business Insider reminds us "in 2021, in the early days of the meme stock phenomenon, shares soared more than 200% from September to their peak in early November, before tumbling almost 50% in the following months." At the heart of the latest swing were two hedge funds: SRS Investment Management, founded by Karthik Sarma and Pentwater Capital Management run by Matthew Halbower. SRS has been a long-term investor in Avis (since 2010) and controls two board seats, while Pentwater had only begun building its stake in the company earlier this year. Per Matt Levine (Bloomberg Money Stuff, Apr 15), the two hedge funds together owned 69.3% of Avis shares: SRS (49.3%) and Pentwater (~20.0%). 

But that's not all, Levin also notes that both funds also had other bets on Avis stock, including cash-settled total return swaps ("TRS") with Wall Street banks. TRS are financial derivatives that allow investors to gain economic exposure to an asset without actually owning it. In this case, SRS and Pentwater had contracts with investment banks that paid them any increase in the price of Avis stock, while the hedge funds would pay the banks any decrease in the price of the same. But because banks can’t/ won’t take on that much risk, they’ll hedge their position by purchasing an equivalent amount of shares. So, the banks own Avis stock but SRS and Pentwater gain/ lose based on the price action (of course the banks collect a nice fee for structuring the arrangement). The hedge funds do have to put up collateral (margin) to make sure they are good for the money if stock moves against them. Another way of thinking these swaps is that they are a leverage tool for hedge funds. The bank(s) "buys the stock and holds it on behalf of the hedge fund, which post collateral for part of the value of the stock." Based on Levin's calculations, SRS and Pentwater owned ~2.8M (8.1%) and ~10.1M (28.8%) Avis shares on swap. So, SRS and Pentwater owned ~106% of Avis stock? But, again, that's not all...because Avis is a public stock in various stock indexes (e.g., the Nasdaq GS) it has other institutional (e.g., BlackRock, Vanguard, State Street, etc.) and retail investors. In fact, Levin estimates just SRS, Pentwater, and those big three index investors owned at least 119% of Avis stock.

Source: Octus.As of May 1, 2026.

How do you own more than 100% of a company's stock? Short selling, that's how. Shorting selling is where an investor borrows and then sells a security, aiming to buy it back later at a lower price to profit from a decline in its value. It's betting against a stock because you believe it's overvalued; it's normal and completely legal. Levin (yes, relying a heavily on him for this post) provides a nice stylistic explanation of how shorting works:

1. A company issues 100 shares. Four investors — call them A, B, C and D — each buy 25 shares.

2. Investor X wants to bet against the stock, so she borrows 20 shares from A and sells them to B.

3. Now A still owns 25 shares (she loaned 20 out to X, but expects them back), as do C and D, while B now owns 45 shares (25 she bought from the company and 20 she bought from X). Thus, people own a total of 120 shares.

4. But the books balance, because X owns negative 20 shares. There are 100 shares outstanding, and people are long a total of 120 and short a total of 20.

5. Investor Y can borrow 40 shares from B and sell them to C, etc., creating just as many shares as you want.

In the above example, the percentage the stock’s shares that have been sold short but not yet repurchased (aka short interest) in step 3 is 20%. In step 5 it would be 60% and so on. Short interest can rise substantially when investors are very bearish on a stock--data from MLQ.ai shows short interest on Avis stock reaching 86.2% on April 21. That's when things can get really exciting/risky depending on which side of the trade you're on. That's because stock borrowing "is usually open term, meaning that the owner can demand that you return it any time." 

Typically, hedge funds or even retail investors will short a stock by borrowing it from a bank or broker, who will probably borrow it from an institutional investor (e.g., BlackRock, Vanguard, State Street, etc. or a pension fund). Who the end owner is matters...because if SRS and Pentwater own a disproportionate amount of Avis stock, then there is a good possibility some/a lot/ most of the Avis shares that were sold short were ultimately borrowed from them? In which case, if they demand those shares back, who would you buy it from? Them! Because they own (economically speaking) 108% of the company's stock! What would they charge you to allow to you meet your legal obligation to them? A lot!    

It may not have happened exactly like that, but after Pentwater converted some of their derivative exposure to direct ownership and publicly updated stake in Avis at the beginning of April, it quickly became very difficult to continue borrowing the stock. Short sellers began cut their losses and buy back the stock, fanning a giant short squeeze. Per the WSJ, "at its peak on April 22, Avis’s shares reached $847.70 in intraday trading—nearly seven times higher than where the roughly $128 price at which stock started the year. Then just as quickly...it started to fall as Pentwater unloaded shares, with Avis’s stock losing 68% in just two trading days." Momentum/ retail interest also intensified in the run-up to the peak, which means a lot of day traders bought at or near the top once again...oops!  

Source: WSJ. As of April 29, 2026.

So, how much did Pentwater and SRS make and short sellers lose? Well, Pentwater sold 4.3M Avis shares on April 22–23 at an average price of $404, generating $1.75 billion in gross proceeds and leaving it with roughly 3.5M direct shares, representing 9.9% of Avis’ outstanding shares. But that's only small percentage of their total exposure. Per Octus, Pentwater also held a 29% synthetic stake via TRS, referencing ~10.2M shares with reference prices between $57 and $204. These swaps would have presumably generated very large mark‑to‑market gains during the April spike (though we don't have any profit figures). Similarly, SRS is estimated to have had ~$8.0 billion in mark-to-market gains by April 21 but may have gave back ~$5.6 billion of they held their positions. Sure, you win some, lose some...but it's always nice when you can ahead by ~$2.5 billion. Avis short sellers lost ~$4.1 billion in April, but retail investors did not suffer meaningful aggregate losses since they were net long Avis and benefited from the short squeeze. However, the surge in retailing volume in the days before the top suggests those who piled in late lost quite a bit. Oh well, you win some, you lose some. 

Private Credit Teeters on the Edge

In our last post we wrote about the cracks in private credit that began to show in February. A large swath of semi-liquid, non-traded BDCs, that have historically ignored broader market dynamics (volatility laundering?), recorded their first negative monthly return in years. However, stress was manifesting across the biggest private credit managers not only in the form much-needed valuation adjustments (we saw losses ranging from -7 bps to -200+ bps), but more pressingly in the form of large-scale redemptions.

We noted firms like Apollo, Ares, BlackRock/ HPS gated investors; restricting redemptions to 5% of fund NAV per quarter, even as demand for share repurchases was double that amount in many cases. Others like Blackstone put in their own money to help meet surging redemptions to stave off investor panic. But, panicking they seem to be...Blue Owl, perhaps the epicenter of the private credit concern (see our prior post) shocked Wall Street today when they revealed that their flagship private credit funds were facing an unprecedented surge in withdrawal requests. Per Quote the Raven, "investors in the $36 billion Blue Owl Credit Income Corp. asked to redeem 21.9% of shares in the latest quarter (up from 5.2%), while the smaller Blue Owl Technology Income Corp. saw redemption requests spike to a staggering 40.7% (up from 15.4%)." The chart below (click to enlarge) tracks redemptions for the biggest private credit funds that collectively manage over $200 billion in gross assets.

Source: Zero Hedge and Quote the Raven 

Liquidity it is a fundamental concept in finance. Non-traded BDCs hold illiquid assets, but offer quarterly liquidity (yes, it is stated in their prospectus that it is partial liquidity; but these funds are heavily marketed to retail clients who may not fully understand the distinction). In any case, investors now realize something is amiss and are stampeding towards a very narrow exit door. That will only build pressure to try to get out quickly. Gates can help stave off the type of liquidity spiral that can rapidly wreak havoc in the public markets. But the process is still the same in private markets...only slower moving, where managers hope market dynamics will change for the better down the line and save them. So, investors face the classic prisoner's dilemma. As explained by Leyla Kunimoto at Accredited Investors Insights, actions are influenced by (i) limited information at the time of decision-making (private BDCs are notoriously opaque with limited insights about loans and portfolio exposures), (ii) there is no penalty to request a redemption, and (iii) critically, there is a potential penalty for not requesting one (losses transpire). So, under those circumstances your choices are:

What do you do? YOU REDEEM! Get out as much as you can, as quickly as you can! And hope others HOLD! When everyone has the same idea well things head south, very quickly. Private credit managers are learning that lesson painfully. Shares of public alternative asset managers are down 20-40% YTD, as shown in the chart below (click to enlarge). Shares of Blue Owl in particular have dropped more than 38% in 2026 and are down a whopping 68% from its all-time high of $26.68 on January 20, 2025.

Public Alternative Asset Manager Performances YTD

Source: Investment Research Partners, Y-Charts, as of March 31, 2026.

Private Credit's Negative Month

CNBC, the finance world's ultimate cheerleader, recently put out an article declaring private credit's 'zero-loss fantasy' was coming to an end. When even your biggest fan sounds concerned something is up. Now, there have been a lot of negative headlines around private credit for the past six months--mainly tied to business development companies ("BDCs"). What started out as a botched attempt by one lender, Blue Owl (albeit one of the industry's biggest players), to give its investors liquidity has morphed into fundamental concerns about the asset class itself following a few high-profile defaults. And liquidity.

Many of private credit's biggest investment vehicles are private, semi-liquid BDCs marketed to retail clients, who want (and need) liquidity. Private credit managers make 5-year loans to levered private equity-backed companies that don't trade. These loans often offer a 3-4% premium to public market fixed income (the 'liquidity premium'). Historically, they were sold to institutions, such as pension funds and endowments that have long investment horizons. But private credited needed to grow, so they targeted wealthy individuals. 

The innovation was evergreen funds that offered quarterly liquidity. Yay! Illiquid assets in a liquid-y investment vehicle. Retail investors could have their cake and eat it too! There was a catch of course (which most people didn't seem to pay much attention to). Liquidity? Sure; but...up to only 5% of fund's net asset value ("NAV") in any given quarter. In normal circumstances, any individual investor could get all their money out at the end of the quarter; but what if many investors wanted to get out at the same time? Well, then the gates would come down to avoid a run on the bank scenario. In that case, it could, in theory, take you 20 quarters or 5 years to get all your money out. But gating often that just creates more panic and brings about a self-fulling prophecy as redemption pressure increases. 

In Q4 2025 Blue Owl Technology Income Corp. ("OTIC") and Blue Owl Credit Income Corp. ("OCIC) saw redemption requests of 15.4% and 5.2% of NAV. In Q1 2026, Blackstone Private Credit Fund ("BCRED"), the industry's $83 billion behemoth, received redemption requests totaling 7.9% of NAV; likewise, Oaktree Strategic Credit Fund ("OCREDIT") received 8.5% in redemption requests in Q1. To their credit, these funds have managed to, or plan to, honor 100% of repurchase requests for the quarter by utilizing credit facilities, new capital, maturing loans, and, in the case of Blackstone, employee commitments. But others have not, as these measures naturally impact future operations. Apollo Debt Solutions ("ADS"), Ares Strategic Income Fund ("ASIF"), and HPS/ BlackRock Corporate Lending Fund ("HLEND") have all received redemptions well in excess of 5% of NAV and plan to gate investors. Collectively, these seven funds manage more than $200 billion of gross assets. And there are many more cases as withdrawals have spiked across the asset class in recent months, as shown below (click to enlarge).

Until recently, all these challenges hadn't really translated into negative returns for investors in the above funds. They are private, non-traded BDCs that report monthly. They don't really have to mark-to-market. Instead, they mostly carry loans at par till there's a default, which can be a subjective measure (extend-and-pretend anyone?). But in February, many of the biggest non-traded BDCs recorded their first monthly loss in almost four years, suggesting they are beginning to mark down questionable loans. 

ASIF, ADS, BCRED, OCIC, OTIC, HLEND, and OCREDIT were all negative in February, ranging in losses from -7bps to -219 bps, as shown below (click to enlarge). Funds with more software exposure tended to have worse performances. The urgent worry among investors, as noted by Goldman Sachs, is that "money managers have loaned too much to software and technology companies vulnerable to disruption from AI." 

Source: Public websites of funds, SEC, and Mantabye.

This may just be the beginning for managers. Sell-side analysts, including UBS' Matthew Mish, forecasts defaults could reach up to 15% in an extreme scenario. What does that mean for fund investors? To do the math, we need two additional pieces of information: (i) the recovery rate on defaults and (ii) leverage. Defaults (failure to make timely payments on loans) doesn't mean a total loss for the lender. When a borrower defaults, lenders typically can recover a portion of the principal through bankruptcy restructuring or asset sales. Historically, for senior secured loans (which are the relatively 'safe' type of loans these funds predominantly provide), the recovery rate has been 70-80%. Let's assume 70% for our example. Second, most of these funds are levered at least 1:1; i.e., for every $100 of their investors' money they lend out, they borrow another $100 from banks to increase the total loan amount. Leverage can increase returns but also amplify losses.

If credit defaults do rise to 15%, with a 70% recovery rate, you'd expect losses around 5% for an unlevered fund. However, since these funds are all 1-1.25x levered (paying 8% or more in interest for borrowed funds) the losses could be 13-17%, based on the amount of leverage and the cost of debt. Even assuming that defaults don't happen all at once but over 2-3 years, it is still shocking for an asset class that is expected to have low single-digit defaults even under challenging market conditions. Which explains why retail investors are so eager to get out. And fund managers only incentivized them to do so. Managers didn't want to write down the value of their portfolios (not a good look) and were willing to cash out investors at par even though there is a very good chance these many of these loans could be worth less. The rationale decision of course is to take the managers up on their offer and get out as quickly as you can. And investors have. Too many have! Now you have gates and the start of valuation adjustments! Let's how see far write downs go and how painful it becomes for investors.