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Why Carlyle’s 4Q16 Performance Nosedived

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Dec. 4 2020, Updated 10:53 a.m. ET

Carlyle’s 4Q16 performance

Carlyle Group (CG) posted ENI (economic net income) of $0.02 in 4Q16 on February 8, 2016, which was lower than the analyst estimate of $0.41. The ENI was lower sequentially as well as on a YoY (year-over-year) basis, reflecting lower valuations and losses in global market strategies.

The company raised $3.5 billion in gross new capital and $2.7 billion on a net basis after redemptions.

Carlyle has seen losses in its hedge fund business, which dragged down its profitability and revenues in 2016. The company managed carry fund appreciation of 12% in 2016 and 5% during 4Q16. In 4Q16, Carlyle posted pretax distributable income of $7 million and $652 million for the full year.

Excluding the net charges in its global market strategies, distributable earnings stood at $182 million in 4Q16. As of December 31, 2016, Carlyle was managing assets totaling $157.6 billion, as compared to $182.6 billion in 2015.

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Alternative asset managers aim to outperform major indexes such as the S&P 500 (SPX) (IVV). Active fund managers tend to benefit more from performance fees, which are generated in case of superior returns. Alternative asset managers like KKR (KKR), Blackstone (BX), and Apollo Global Management (APO) have seen rebounds in their earnings in 2016. Carlyle has seen a relatively weaker performance, but if the company can stabilize its hedge funds division, it could see strong earnings in 2017.

Alternative asset manager

Carlyle Group (CG) advises investment funds, which invest across asset classes, regions, and multiple investment strategies to generate superior returns for its limited partners or investors. The company manages money for more than 1,650 active carry fund investors from 78 countries.

In this series, we’ll study Carlyle Group’s assets under management, new funds, the performance of various divisions, dividends, and valuations in 4Q16.

Let’s start with CG’s assets under management.

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