Why Process Is the Hedge That Never Goes Out of Style
As we shared during our year-end webinar, 2025 closed with a market full of competing narratives. Headlines moved in every direction. Sentiment shifted weekly. And yet one reality remained constant:
Disciplined credit processes continue to win, especially in private markets.
Coming into 2026, we haven’t changed our view or our approach.
If anything, we’ve strengthened our conviction in the foundation that has always guided our work:
Senior secured, asset-backed lending executed with discipline, structure, and ongoing oversight.
In a market where capital is becoming more selective, the importance of underwriting discipline becomes more visible. For us, it has always been central and sticking to our core process remains one of our greatest advantages.
“On Wall Street today, news of lower interest rates sent the stock market up, but then the expectation that these rates would be inflationary sent the market down, until the realization that lower rates might stimulate the sluggish economy pushed the market up, before it ultimately went down on fears an overheated economy would lead to a reimposition of higher interest rates.”
We have a core belief in investing in a way that isn’t dependent on stock market movements to fulfil our investment objectives.
Garrington vs. Public Markets:
We Choose Process Over Predictions
The public markets rise, fall, react, and re-react sometimes all in the same day.
A single headline can send indexes higher by noon and lower by the end of the afternoon.
The noise is constant, and the reactions are often contradictory.
The cartoon reflects the familiar pattern:
markets swinging on expectations of lower rates, then higher rates, then concerns that the very same rate cuts may eventually lead to renewed increases.
Private credit behaves differently when executed with discipline.
It is built on:
- identifiable assets,
- recurring cash flows,
- conservative structures, and
- defined repayment pathways.
As we discussed in our year-end webinar, these fundamentals are what allow private credit portfolios to remain steady even when public markets react sharply to shifting headlines. Our goal is not to forecast volatility, and certainly not to benefit from it, but to operate within a framework intentionally insulated from daily market movements.
The most reliable way to navigate market volatility is to avoid completely relying on assets that are exposed to it.
This is exactly why our senior-secured, asset-backed approach serves as a stable complement to market-exposed allocations.
Following Our Core Process
At the start of each year, we deliberately revisit the framework that defines how we lend. Everything we do comes back to the fundamentals of the chart below.
A. We stay at the top of the capital stack.
Focus on senior secured. First-loss risk is for equity holders, not lenders.
We do not drift down the risk curve for the sake of yield.
B. We lend against tangible, verifiable assets.
Inventory, receivables, equipment, vehicles, real property, liquid collateral.
Assets that can be valued, monitored, and recovered if necessary.
C. We underwrite to the forced liquidation value, not the paper value.
We start from the most conservative interpretation of what the assets are actually worth in downside scenarios.
If the value isn’t clear, we don’t advance.
D. Advance rates are earned, not assumed.
We structure loans based on what the collateral supports today, not on what the business hopes it will support in the future.
E. We perfect liens and enforce structure.
Covenants, reporting, field exams, collateral audits, and ongoing monitoring.
Our process doesn’t end at funding.
It strengthens after funding.
This is the core of our lending philosophy, a framework we apply consistently, transaction after transaction.
It’s why investors look to us for predictable, risk-adjusted returns in the 8–12% range.
And as we begin 2026, it’s as relevant as ever.
The Only Sustainable Hedge in Private Credit Is Discipline
In a market where narratives shift quickly, process remains constant.
And, as we emphasized during our year-end webinar, three principles anchor our approach:
Structure protects capital.
Terms, collateral, covenants, and monitoring matter more than predictions.
Selectivity is a competitive advantage.
We fund what fits our process, not what fits the market’s appetite.
Consistency drives outcomes.
We do not chase trends. We do not drift strategy.
We benefit from knowing exactly where we win – and staying there.
Closing Perspective
2026 begins with a familiar truth:
Private credit rewards discipline.
It always has.
The market may evolve. Headlines will come and go. Borrowers will face new pressures and new opportunities. But the fundamentals that underpin strong private credit portfolios, collateral, structure, oversight, and experience, do not change.
Our job is to remain disciplined, selective, and consistent in how we deploy capital.
That is the only hedge that never goes out of style.
And as we move into the year, our commitment is unchanged:
Win by not losing.
Follow the process.
Protect capital.
Create stable, risk-adjusted returns for the investors who entrust us with theirs.
