Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors, argues that while some credit provisions are expected, there is no evidence of systemic fraud or widespread losses, particularly within the asset market.

Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors, has stated that the recent panic surrounding credit issues in the financial sector is overstated. He argues that while some credit provisions are expected, there is no evidence of systemic fraud or widespread losses, particularly within the asset market.

Hatfield highlights private equity firms as being especially resilient, noting that these companies have high-quality counterparties and manage, rather than own, most of the capital at risk. He believes that the current downturn in their valuations presents a strong buying opportunity, as these firms are among the best financial franchises globally and are well-positioned for long-term growth.

Credit panic overdone, says Infrastructure Capital's Jay Hatfield

Welcome back to Power Lunch. I'm Dominic Chu. Time now for your market navigator. So investors have been keeping a close eye on financials in recent weeks, but our next guest thinks one group in particular in those financials has been unfairly hurt by some of the headlines around potential credit problems. The silver lining here possibly is that that could translate into some investment opportunities. So here to make the case is Jay Hatfield, CEO and CIO at Infrastructure Capital Advisors, ICAP. Jay, thank you very much for being with us. I know that as a professional trader and money manager, you are not at least immune to what's going on right now with regard to these smaller banks and lending institutions. Many of these names in private equity, private credit providers, business development companies, and even prime brokers are sinking again today. What exactly do you make of the price action? Jeffrey's in particular is down about 10%. Thanks, Dom. It's great to be back. Well, we do, like your prior guest, think that this credit panic is overdone. There's certainly gonna be credit provisions, but we don't think there's a systemic fraud going on, particularly in the asset market, but we have an easier trade. So we think the best strategy is to not go into the blast zone, like your prior guest suggested, but go to a sector that's heavily insulated, which is the private equity group. These are holdings in our ICAP large dividend fund, and also in our preferred stock fund, because they have mandatories outstanding, but these companies have much higher quality counterparties, particularly on the asset backside, and we don't think they're gonna have substantial losses, but if they did, it's not their capital. They're managing the capital. They have some small investments in it, but for other parties, they don't wanna lose their clients' capital, but it's not like a bank where it's just taking direct hits. So we don't think they have really any credit exposure. They have other businesses are growing rapidly. These are the best financial franchises in the world. They have long-term locked up capital with good fees, and then also upside from realizations. So there really is no better companies, no better brands like KKR. So when they go on sale like this, we think it's a great opportunity to step in, and we have targets that might even seem ridiculous from where they are now, but really these are premium companies that should trade at premium multiples.

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Breakdown