Setting the Record Straighter - by Nick Nemeth

Larry Swedroe, a retired finance author, published a defense of CCLFX, the $33 billion Cliffwater Corporate Lending Fund, that called Nick Nemeth's forensic audit of the fund "misinformation." Nemeth's response, published on Mispriced Assets, argues that Swedroe did not disclose his personal investment in CCLFX and CELFX, and that his promotional articles about the fund were largely undisclosed. The article notes that Swedroe said on the White Coat Investor podcast in January 2026 that he owns "roughly equal amounts of both" funds, and that only one of at least ten promotional Substack pieces contained an ownership disclosure.

Nemeth cites Bloomberg's report that investors requested 14% of their shares back, nearly three times the redemption gate, which he describes as the largest withdrawal event in private credit history. He also cites PitchBook's report that Cliffwater is selling $1 billion in assets through Evercore. Nemeth contrasts CCLFX's reported 0.63% non-accruals with the public BDC average of 2.7%, and points to FS KKR's 5.5% non-accrual rate and 25% dividend cut in Q4 2025 as comparisons.

On liquidity, Nemeth states that cash fell from $375 million to $92 million over six months, against $6.3 billion in unfunded commitments. He cites the semi-annual report (p.126) for organic cash burn of roughly $8.8 billion annualized, with the gap filled by share sales and debt, including a $3.2 billion credit facility draw and a $500 million Macquarie repo. Nemeth also argues that the leverage figure Swedroe cited, around 60% combined, excludes roughly $25 billion in PIV-level debt, and that adjusted leverage could be 70% to 150%, compared with a reported debt-to-equity ratio of 31%.

Nemeth also addresses the valuation backstop Swedroe described, arguing it creates a "synthetic mark" that could collapse under stress, and that the mechanism is not disclosed in the semi-annual report, prospectus, or SAI as he reads them. He also notes that the audit firm, Cohen & Company, received a 2021 PCAOB inspection deficiency involving Level 3 fair value assumptions. Rubric Capital, a $3 billion hedge fund, sent a private letter to limited partners calling CCLFX "a canary in a coal mine," which Reuters reported on February 26. Swedroe's response is characterized in the article as a rebuttal that does not engage with the underlying analysis. Cliffwater has not been quoted in the article as disputing these specific figures beyond its characterization of the concerns as "overcited and belabored" in response to Rubric.