This Swiss Market Index (SMI) private equity stock is thriving

By:
on Nov 29, 2023
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  • The Swiss Market Index has recovered in the past few weeks.
  • There is optimism that the Federal Reserve and SNB will slash rates in 2024.
  • Partners Group is the best-performing SMI constituent this year.

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The Swiss Market Index (SMI) has bounced back in the past few weeks as investors predict that interest rates will start retreating in 2024. The blue-chip index, which tracks the biggest Swiss companies, was trading at CHF 10,760, which was about 5% above the lowest point in November. It remains about 7.3% below the highest point this year.

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Partners Group is thriving

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Most SMI index constituents have done well this year. UBS shares have risen by over 34% this year, helped by its acquisition of Credit Suisse, then the second-biggest bank in the country.

Other top performers in the SMI index are Holcim, Logitech, ABB, and Swiss Re, which have jumped by over 20% this year. On the other hand, the top laggards are Lonza, Roche Holdings, Richemont, and Nestle.

Partners Group (SWX: PGHN), a large private equity company, is the best-performing constituent in the Swiss Market Index. The stock has jumped by over 38% even as challenges in the industry has remained. Higher interest rates have reduced the number of transactions and devalued most companies.

Partners Group is not the only PE firm whose stock is doing well. As I wrote recently, shares of PE firms like Apollo Global Management, KKR, and Blackstone have risen by over 40% this year. Expectations are that central banks will start cutting rates in 2024 since inflation is falling.

Partners Group is a large PE firm that has over $131 billion in assets under management. Most of its funds are in private equity followed by private debt, real estate, and private infrastructure. It has over 1,000 clients, including the likes of Mubadala, MetLife, New York Life, BP, Holcim, and Ericsson.

Partners Group is truly a global private company with most of its investments being in North America followed by UK and Ireland, Germany and Austria, and Switzerland. It has limited its investments in China, fearing that risks in the country were elevated.

The most recent financial results showed that Partners Group total revenue jumped to over CHF 1.05 billion in the first half of the year. It had made 881 million in the same period in 2022. Its EBIT jumped to CHF 644 million while its profit jumped to CHF 551 million.

Partners Group AUM by client and region

This revenue growth was because of the company’s management fees, which it charges its customers. Most of these fees come from its mandates, closed-ended funds, and evergreen programs.

Looking ahead, Partners Group will likely continue doing well in 2024 now that hopes of rate cuts have risen. In an interview with Bloomberg, Bill Ackman, one of the top players in Wall Street, said that he expects rates to start coming down in Q1’24.

Partners Group stock price analysis

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Partners Group stock

The daily chart shows that the Partners Group share price has been in a strong uptrend in the past few months. It has recovered from the year-to-date low of CHF 692 to over CHF 1,100. 

It has risen above the 50% Fibonacci Retracement level. Most recently, it has jumped above the key resistance point at CHF 1,065, the highest point on September 20th. The stock has risen above the 50-day and 200-day moving averages.

Therefore, the outlook for the stock is bullish, with the next level to watch being at CHF 1,218, the 61.8% retracement point. This price is about 7.8% from the current level.

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CHF Finance & Banking Indices Stock Market