Private credit isn’t the new story anymore. The more interesting questions are about what happens as the industry matures. That's where my conversation with Churchill CEO Ken Kencel begins.

I found myself coming back to one phrase from our conversation: "the sediment at the bottom of the barrel." It's how Kencel explains why the highest-returning private credit manager isn't necessarily the best one. In credit, headline returns can look attractive for years until the weakest loans finally reveal themselves. Only then do investors discover what was really sitting at the bottom of the portfolio.

The same thing comes up again as we turn to retail. Kencel argues that recent redemption pressures say less about private credit itself, but rather that investors and managers are still adjusting to the realities of an illiquid asset class. As he puts it, private credit isn't "semi-liquid." It's fundamentally illiquid, and products need to reflect that.

Another part of the conversation I found particularly interesting was Churchill's role as both a lender and an investor in hundreds of private equity funds. I asked why private equity firms would allow one of their lenders into their funds. Kencel's answer was that Churchill isn't just another lender. As a long-term LP, the firm has relationships that extend well beyond individual loans, giving it a different perspective on managers, businesses, and opportunities across private markets.

We also discussed where he sees legitimate stress building today, why relationships still matter in the middle market despite the industry's growth, and what institutional investors should be paying closer attention to as private credit enters its next phase.

More than a decade ago, I wrote a story called "Is Alpha Dead?" The premise was simple: Markets had become so competitive, so efficient, and so crowded that generating excess returns was getting harder and harder.

Andre Perold, CIO of HighVista Strategies, was one of the people I interviewed for that piece.

So I was curious how he thinks about the question today.

Perold argues that we're living through a period of such rapid technological and economic change that opportunities for alpha may actually be expanding. In a world shaped by artificial intelligence, breakthroughs in healthcare, and shifting business models, markets don't always adapt as quickly as investors assume.

As Perold says, “the ability to get an edge is much greater when new things are happening, for better or worse. You can see things, understand things, and react more easily in this new world.”

That doesn't mean alpha is easy to find. Perold has always believed investors need to look in what he calls "beautifully inefficient" markets, smaller corners of the investing world where size, specialization, and human behavior still create opportunities. That may be more important than ever.

We talked about biotech, small buyouts, risk, the real definition of a mistake, diversification, and why some of the most interesting investors are what he calls "small geniuses" operating far from Wall Street's spotlight until great performance attracts more capital and the search for the next small genius begins again.

We also discussed a topic that feels particularly relevant today: why networks (of people) still matter. At a time when we’re swimming in information and AI-generated stories about that information, Perold believes the edge comes from long relationships with people whose judgment you trust, and who help you see opportunities and risks that aren't obvious from the data and endless crunching of it. And data won't introduce you to that next great investor. Take a walk and listen to my conversation with Andre.

In this episode, I spoke with Stuart Fiertz, co-founder and president of Cheyne Capital.

I've known Stuart for years and one of the things I appreciate most about him is his willingness to say things that many people in the industry are thinking but few will say publicly. This conversation was a good example.

We started with private credit, because, well, there’s a lot to say. Stuart argued that many of the concerns he and other investors have raised over the years are beginning to surface. He discusses the rise of payment-in-kind loans, concentration in software and technology, and why he believes the industry still hasn't fully absorbed the consequences of the dramatic interest-rate shift that began in 2020.

As Stuart put it: "You just can't have such a momentous change in an interest-rate regime and not have fallout from that."

But he doesn't expect a dramatic collapse. In fact, the industry has become remarkably good, perhaps too good, at delaying any reckoning. Loose covenants, refinancing activity, continuation vehicles, evergreen capital, and fresh sources of funding are all helping extend the credit cycle. The problems are showing up, Stuart argues, but they're unfolding far more slowly than many expected.

We also discussed what may ultimately unlock the industry's enormous backlog of unsold private companies. Stuart has been thinking about this question for a while. When he entered the business, private equity often created significant value by taking public companies private and improving them. Today, many businesses have been passed from one sponsor to another through multiple ownership cycles.
Stuart’s question is a simple one: "Who is leaving value on the table?" he asked.

His point was not simply that valuations remain too high. “I think there's a little bit of a challenge here that is more fundamental than I think people realize. It's part that the lemon's been squeezed. I think it's going to take a meaningful valuation haircut to move them. And I'm just not sure why the PE firms would mark them down.”

We also get into why Stuart believes transparency may be the industry's biggest challenge. He argues that investors, regulators, and managers would all benefit from more consistent reporting and warns that private credit firms risk inviting heavy-handed regulation if they don't become more forthcoming about what is happening inside portfolios.

And there’s more. Listen in for other topics and tidbits we covered:
• The difference between "cockroaches" and "termites" when assessing risk in credit markets
• Why semi-liquid credit funds may increase cyclicality and pressure managers to deploy capital
• Whether the industry's push into retail was driven more by asset gathering than investor need and why it matters
• What continuation funds reveal about today's private equity exit environment
• Why Europe remains both attractive and frustrating for private market investors