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What to Expect from Alternative Asset Managers in 2017

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 8
What to Expect from Alternative Asset Managers in 2017 PART 8 OF 11

Blackstone and Apollo Command Premium Valuations on Holdings

High valuations amid growth

Blackstone Group (BX) is valued at 9.4x on a one-year forward earnings basis. It’s trading at a premium compared to Carlyle Group’s (CG) 7.4x, KKR’s (KKR) 7.6x, and Apollo Global Management’s (APO) 8.5x.

Blackstone stock has risen 3.9% over the past one quarter. It’s risen 9.9% over the past year, reflecting an improved operating performance. The performance has been positively impacted by factors such as the rise in broad markets and rising real estate valuations in Europe and Asia.

Blackstone and Apollo Command Premium Valuations on Holdings

Blackstone and Apollo Command Premium Valuations on Holdings

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Investments across asset classes

Alternatives have deployed funds across high return areas like private equity and hedge funds, real estate, and safer bets through credit markets. They have targeted new growth avenues for deployments and raising funds. However, alternatives have been relatively slow on the deployment front in anticipation of finding cheaper valuation pockets.

Carlyle’s valuations have fallen consistently, and the gap has widened on a relatively weak operating performance and realized losses in global market strategies, credit markets, and hedge fund solutions. However, the company has seen some rebound in its private equity, real estate, buyout funds, and legacy energy portfolios.

KKR has also been trading at a discount, and it’s been deploying capital at a record pace in a bid to garner higher valuations in the current year. As equities have risen and markets are stabilizing, investors can deploy more funds towards equities and alternatives (IYF).

In the next part of our series, we’ll study earnings outlooks for alternatives.

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