Apollo Global stock: Here’s why it is better than Blackstone

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on Nov 24, 2023
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  • Apollo Global share price is nearing its all-time high.
  • The company owns Athene, which is a leading retirement services provider.
  • It is expected to grow at a faster pace than Blackstone.

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Apollo Global Management (NYSE: APO) stock price has done well in 2023 even as the private equity industry faces numerous headwinds. The shares jumped to a high of $91.42 on Friday as they near their all-time high of $92.76. 

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Apollo’s performance has mirrored that of other private equity companies like Blackstone and KKR, which have all jumped by over 45% this year. It has outperformed Carlyle and Brookfield Asset Management. 

The case for Apollo

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Apollo Global Management is a leading company in the private equity industry with over $631 billion in assets under management. It operates its business in four key parts. First, it has a yield business that manages over $461 billion in assets. This business provides financing across public and private markets.

Second, the company has Hybrid, which has $61 billion in assets. This business is more flexible in how it allocates capital to companies. Finally, it has its private equity company, where it buys and sells companies. 

Most importantly, Apollo owns Athene, a huge financial services company that provides retirement solutions like annuities. This business plays an important role in Apollo’s business since it provides it with cheap financing. It now has over $21 billion in regulatory capital and has an excellent credit rating.

Therefore, there are several reasons why Apollo is a good company to invest in. First, unlike other PE firms with no insurance business, Apollo has one that is growing fast. Athene receives funds from customers today and then promises to pay them many years to come, which is an excellent business to be in.

Apollo is a private credit company

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Second, while Apollo is classified as a private equity company, it is mostly in the private credit business. Private credit is an industry that is growing quite well in this high-interest rate environment. According to its 10k, 80% of its fee-bearing income are in the private credit industry. 

Analysts believe that private credit business has more room to grow as bank financing remain under pressure. After the collapse of banks like Silicon Valley Bank, Signature, and First Republic, many of them have now moved to tighten their belts. 

According to Morgan Stanley, the private credit industry was worth over $1.5 trillion in 2023, up from $875 billion in 2020. The bank expects that the industry will soar to $2.7 trillion in 2027. Apollo will likely continue benefiting as this industry grows.

Apollo is still a big company in the private equity industry, with its solutions having over $98 billion in assets. However, these funds represents a small part of the PE sector, unlike companies like Blackrock and KKR. 

Private equity is going through a rough period as deal exits drop in a high-interest rate environment.

Apollo valuation is cheaper

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The other reason why Apollo Global Management is a better company is that its valuation is quite cheaper than Blackstone and KKR. Apollo has a forward PE multiple of 13.71 while BX and KKR have 27.20 and 20.16. This valuation gap is happening even though Apollo is growing at a faster pace. 

Apollo’s forward revenue growth stands at 17.78%, which is higher than Blackstone’s 4.63%. KKR’s forward revenue growth is at 35%. In terms of EPS, Apollo has a forward growth of 20.6% compared to Blackstone’s 4.38% and KKR’s 1.73%.

A likely reason for its cheaper is its association with Leon Black, who holds no position in the company today. He was associated with Epstein and has faced numerous lawsuits recently.

Apollo stock price technical analysis

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Apollo

APO chart by TradingView

The daily chart shows that the APO stock price is doing well and is nearing the important resistance point at $92.68, its highest point in September. It remains above all moving averages

The near-term risk is that the stock is forming a double-top pattern at $92.68. This pattern is one of the most popular bearish signs. Its neckline is at $75.63, the lowest point on October 31st. 

Therefore, there is a likelihood that the stock will pull back in the coming weeks as investors take profits. In the long term, however, the shares will continue rising, with the next target being at $100.

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