Short sellers are piling into Blue Owl Capital Inc. shares as concerns mount over private credit risks and artificial intelligence investments. The percentage of Blue Owl's free float held short climbed to a record 14.65% this week, according to S3 Partners LLC, surpassing the previous high of 14.3% from December. A separate measure from S&P Global Market Intelligence put short interest even higher at 17.9% as of yesterday's close.

Blue Owl shares were the most borrowed among US stocks Wednesday, with over 19 million shares borrowed as of 2 p.m. in New York. Data from EquiLend shows month-over-month borrowing up 46% and financing rates up 266%, signaling "striking moves" in investor demand to place bearish wagers. The stock has already lost nearly one-third of its value this year and just emerged from its steepest monthly decline ever in February.

Blue Owl executives have defended the company's position, citing low default rates in private debt funds and predicting benign credit conditions ahead. However, the firm has faced scrutiny over its AI investments, lending standards, and a scrapped plan to merge two private-credit funds. With financing rates on new borrowings exceeding 200 basis points annually due to continuous demand, investors appear convinced there's more downside ahead for the beleaguered asset manager.