While evaluating companies on a yearly basis is still too short a timeline to evaluate wholesale strategy change, it’s worth at least giving it a shot.
2022 has been a potential year of divergence. While too early to see if select alternative asset managers will definitively falter or shine, it’s worth trying to start parse stylistic differences in the performance numbers. At least year to date, the more “thematic” oriented private equity sub-businesses (Blackstone, KKR) are down on the year versus the more value oriented managers (Apollo, Ares, Carlyle).
| Firm | 1Q-2022 | 2Q-2022 | YTD |
| Apollo (Flagship PE) | +7.7% | -4.9% | +2.4% |
| Ares (Corp. PE) | -1.0% | +1.5% | +0.4% |
| Blackstone (Corp. PE) | +2.8% | -6.7% | -4.1% |
| Carlyle (Corp. PE) | +3.0% | +0.0% | +3.0% |
| KKR (Trad. PE) | -5.0% | -7.0% | -11.6% |
To be fair, managers down YTD have had a golden age of returns over the past 5 years. For example, KKR’s America’s Fund XII that started investing in 2017 is tracking at roughly a 2x MOIC in ~5 years, a strong performance. Furthermore, the S&P500 at the halfway point was down more than all of the above, though an argument is to be made that the asset managers don’t mark their holdings down appropriately.
On the credit front, cousins Apollo and Ares appear to be having a standout year on a relative and absolute basis.
| Firm | 1Q-2022 | 2Q-2022 | YTD |
| Apollo (Direct Orig.) | +3.4% | +3.3% | +6.8% |
| Ares (Sr. Direct) | +2.3% | +3.8% | +6.2% |
| Blackstone (Priv. Credit) | +1.7% | -0.1% | +1.5% |
| Carlyle (Global Credit) | +0.0% | +2.0% | +2.0% |
| KKR (Alt. Credit) | -1.0% | -1.0% | -2.0% |
As mentioned before, it’s too early in this new monetary regime to conclude anything about dispersion within the pack. Furthermore, corporate private equity and direct lending are a subset of the full product suites of these players. But if I were sitting in an institutional allocator’s seat (disclaimer: I’m not, and I never have been), I presume I’d be watching these numbers closer than usual to determine if certain managers are better positioned for a new regime than the prior.
Disclosure: We own shares of BX, APO. This isn’t investment advice, do your own work.