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1、COREEquity Research5 August 2019U.S. Brokers, Asset Managers & Exchanges Looking for an Alternative: Initiating on BX, KKR, APO, CG, and ARESAlternative investment strategies have a structural growth story Counter to active asset management, there is continued demand for alternatives as an asset

2、 class, even after years of expansion. From 2008 through 2017, alternative investment AUM grew at a 12% CAGR and the Preqin data suggests another 8% CAGR through 2023 with many institutional investors looking to increase allocation to alts, including 65% of family offices & 40%-50% of pensions,

3、endowments, & sovereign wealth fund.as ability to wait & deploy dry powder accretive has yielded outperformance. Alts as a whole are sitting on $2 trillion of dry powder just waiting to deploy when market opportunities arise. The ability to put money to work when they find the right opportun

4、ities (not just because they have to) and hold investments through a cycle (instead of selling due to an outflow) helps generate higher IRRs and makes them more attractive vs. the traditional asset managers.Alts earnings streams are more stable than you might think. Alternative managers earn fee rev

5、enue on stable committed or invested capitalnot AUM like the traditional asset managersand then generate performance revenue when big assets are sold (in PE) or borrowers continue to make payments (private credit). Unlike traditionals, theres a stable floor of fee revenue on locked-up capital with j

6、ust as much (if not more) upside in a bull market from higher realizations & fundraising.but as stocks, have a high beta. Alternative asset manager stocks have historically traded relatively in tandem with the traditional asset manager stocks, despite a much stickier earnings stream, generating

7、a larger beta than the beta of the businesses. To broaden ownership, all have (or will) converted to C-Corps from LPs, so we see greater potential for stability and higher valuations than in the past.Overweight BX, APO, and ARES; Equal Weight KKR & CG: Figure 1 is a one-page guide to the alts, b

8、ut we see BX as the best in class & most diversified asset manager of the bunch with sustainable earnings growth & investor demand for the stock. ARES mainly generates fee revenue on invested capital vs. committed capital at the PE shops, we see a pretty clear runway for earnings growth agno

9、stic of the fundraising market. APO has the most upside to our target but its a riskier story than the other two. KKR has a unique strategy relative to the peers, but we see it as a bit more pro-cyclical so would be a little cautious here late cycle. CG is a self-help margin improvement story where

10、we see longer-term upside but stay on the sidelines for now.Valuation a bit in flux: Since all the Alts are moving/have moved to C-Corps, historical valuation metrics arent terribly useful. While a sum-of-the-parts analysis can be useful (Figure 15), weve elected for a more simplistic P/E approach w

11、ith BX setting the bar at a market multiple with the rest anchored lower from there (Figure 14).INITIATING COVERAGEU.S. Brokers, Asset Managers & ExchangesNEUTRALUnchangedFor a full list of our ratings, price target and earnings changes in this report, please see table on page 2.U.S. Brokers, As

12、set Managers & ExchangesJeremy Campbell, CFAjeremy.campbell BCI, USFrancesca Krukfrancesca.kruk BCI, USJason Weber+ 1 212 526 9406jason.weber BCI, USBen JacksonBen.Jackson BCI, USBarclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its resear

13、ch reports. As a result, investors should be aware that thefirm may have aof interest that could affect the objectivity of this report. Investorsshould consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGIN

14、NING ON PAGE 56.获取报告1、2、3、每周群内7+报告；当日华尔街日报、4、行研报告均为公开利归原作者所有，起点财经仅分发做内部学习。扫一扫关注 回复：加入“起点财经”群。Barclays | U.S. Brokers, Asset Managers & ExchangesSummary of our Ratings, Price Targets and Earnings Changes in this Report (all changes are shown in bold)Apollo Global Management, LLC (APO) Ares Manage

15、ment Corporation (ARES) KKR & Co. Inc. (KKR)The Blackstone Group L.P. (BX)The Carlyle Group L.P. (CG)N/A N/A N/A N/AN/AOW OW EW OWEW31.5328.7225.1346.6222.95N/A N/A N/A N/AN/A45.0033.0029.0056.0025.00-N/A N/A N/A N/AN/A2.211.461.712.191.80-N/A N/A N/A N/AN/A2.991.931.953.132.48-Source: Barclays

16、Research. Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency. FY1(E): Current fiscal year estimates by Barclays Research. FY2(E): Next fiscal year estimates by Barclays Research.Stock Rating: OW: Overweight; EW: Equal Weight

17、; UW: Underweight; RS: Rating Suspended Industry View: Pos: Positive; Neu: Neutral; Neg: Negative5 August 20192CompanyRatingPricePrice TargetEPS FY1 (E)EPS FY2 (E)Old New 02-Aug-19 Old New %Chg Old New %Chg Old New %ChgU.S. Brokers, Asset Managers & ExchangesNeu NeuBarclays | U.S. Brokers, Asset

18、 Managers & ExchangesEXECUTIVE SUMMARYAs we initiate on the alternative asset managers, we call out both benefits of the group vs. the traditional asset managers as well as which of the alts may be better relative investments.FIGURE 1Breakdown of the alternative Asset ManagersSource: Barclays Re

19、search, Company Reports, Refinitiv; Data as of August 2, 2019. Industry view Neutral.5 August 20193Key InfoBlackstone Group (BX)Apollo Global Mgmt (APO)KKR & Co (KKR)Ares Mgmt Corp (ARES)Carlyle Group (CG)RatingOverweightOverweightEqual WeightOverweightEqual WeightPrice Target$56$45$29$33$25Targ

20、et Multiple18x15x15x17x10xCurrent Multiple15x11x13x15x9xPrice Return Potential20%43%13%15%9%Total Return Potential26%51%17%20%17%Market Cap ($bn)55.76.313.76.47.8PositiveStable earnings growth fromFRE growth story with recentCapital Markets business offersFRE growth story with muchDiversified busine

21、ss with pent well diversified portfolio ofAthora transaction a positiveenhanced revenue generationless reliance on realizationup performance fee potential &Alternative investmentscatalystcycles & performance feesmargin improvementDrawbacksDiversification = lessConcentrated EPS leverage toLar

22、ge balance sheet & capitalLower float & trading volumeReliance on performance fees opportufor "hockey stick"Athene, Athora & Fund VIIImarkets make KKR more pro- may limit ability to invest + the makes it tricky to triangulate earnings inflection from(where some underperformingc

23、yclical than peers (good in"story" has been the same for aearnings power & timeline todeals/capital raisesassets may limit performanceexpansionary environment,yearmargin improvement storyfees)maybe a drawback late cycle)tough to forecastThesisBest in class Alternative assetTough to bal

24、ance FRE growthMacro backdrop keeps us a bit Much higher trading volume, C- Interesting self-help type story manager at a reasonablewith risk to performance fees.more cautious on KKR at thisCorp conversion & index allas management seems focusedvaluation. For most investorsWould look much morepoi

25、nt in the cycle, though we'dbring fresh eyes to very strongon margin improvement, but new to the space, key questionattractive at a cheaperlook to buy-in during in a(& very visible) FRE growthrisk to performance fees makeis "why not BX?"valuationrecessionary pullbackpotentialit a t

26、ougher smid cap playBarclays2020$3.13$2.99$1.95$1.93$2.48EPSStreet$3.08$2.99$2.02$1.90$2.52% Diff1%0%(3%)1%(2%)BuyStreet111210107RatingsHold23415Sell00000Barclays | U.S. Brokers, Asset Managers & ExchangesFIGURE 2As the bull market ages, the alternative asset managers are looking more attractive

27、 relative to the traditional asset managersSource: Barclays Research5 August 20194Key Alternative Asset Manager Themes & Comparisons vs. Traditional Asset ManagersAlt's Fee Earnings are More Stable than Traditional PeersTraditional AM revenue fluctuates with AUM driven by (mostly out-) flows

28、 & performance. Alts generate fee revenue on committed or invested capital (not really market dependent), yielding more stability in fee earnings.Alternative Performance Revenue is Noisy & Hard to Forecast Near-TermAlt performance fees mostly depend on realizing a gain on an investment. PE-d

29、riven Alts are more reliant on procyclical, bulleted realizations where timing / exit multiples are hard to predict. Not really an issue for the traditional asset managers.Less Immediate Revenue Upside from Rallying Market (though Altscatch up)A rallying market will have an immediate impact on AUM (

30、& therefore revenue) at a Traditional asset manager. A sustained rally has a positive impact on realizations & performance revenue at the Alts.Alternative AM Stocks Showcase Higher Beta then the BusinessDespite downside protection to fee earnings, Alternative asset manger stocks still trade

31、in sympathy with other financials & inversely with credit spreads (as recessions can elongate performance fee realizations). C-corp conversion & index inclusion should (hopefully) blunt stock underlying volatility going forwardLocked up capital affords Alternative AMs patience, whichyields o

32、utperformanceThe majority of capital & AUM at the Alts is locked up for a multi-year period (or is permanent) so, unlike traditional asset mangers, Alts can sit on dry powder until returns look attractive. Historically, Alternative strategies (especially at upper tier shops) tend to outperform t

33、raditionalstrategies.Investor Appetite for Alternative Strategies continues to growAlternative AUM has grown at a 12% CAGR since the financial crisis with industry expectations for an additional 8% CAGR by 2023 (to $14 trillion) as a Preqin survey suggests 84% of investors plan to increase their Alt

34、s allocations over the next five years.Alternative Asset Manager Stocks are Now Broadly InvestableThe C-Corp conversion (eliminating messy K-1 tax filings), focus on Fee Related & Distributable Earnings (eliminating messy mark to market Economic Net Income), & index inclusion (so not looking

35、 at an Alt in your index is inherently an "active" decision by a long-only) have all broughtmore investors to the table.Consolidation within the Alts Space Could Yield UpsideLimited Partners (LPs) have been consolidating their General Partner (GP - aka the Alt managers) relationships. For

36、the larger Alts (like the ones we cover), this presents an organic consolidation story. Additionally, we see inorganic growth potential as older firms with aging founders may want to monetize for succession / estate planning purposes or a recessionary event could unearth some struggling managers (es

37、pecially in private credit) that can be had at attractive valuationsBarclays | U.S. Brokers, Asset Managers & ExchangesCONTENTSEXECUTIVE SUMMARY3KEY SUB-SECTOR THEMES & HIGHLIGHTS6Alt Fee Earnings Streams Are More Stable than Traditionals6Though Alternative Asset Manager Stocks Remain Choppy

38、7Structural Flexibility Begets Outsized Performance7Increased Investor Appetite for Alt. Investment Strategies10Alternative Managers > Traditionals; But Now Which Ones?12KEY RISKS17Stock Price Risks17Macro Environment Risks17Regulatory Risks17INDIVIDUAL COMPANY VIEWS18Blackstone Group (BX) Overwe

39、ight18KKR & Co. Inc. (KKR) Equal Weight23Apollo Global Management (APO) Overweight28The Carlyle Group (CG) Equal Weight33Ares Management Corporation (ARES) Overweight38ALTERNATIVE ASSETS & MANAGERS: A PRIMER43Earninetrics & Terms43AUM Metrics & Capital-Related Terms435 August 20195Ba

40、rclays | U.S. Brokers, Asset Managers & ExchangesKEY SUB-SECTOR THEMES & HIGHLIGHTSAs we initiate on alternative asset managers BX, KKR, APO, CG, and ARES, we look at the stocks and companies both in relation to each other and versus other financials. The alternative managers have a unique s

41、et of benefits (a sticky earnings stream, the ability to be pickier with investments) that yield greater downside protection (to fundamentals at least) than both the traditional asset managers & other typical market-exposed companies. That said, alternative manager stocks have typically traded m

42、ore in-line with other financials, resulting in higher beta in Alts stocks than in the beta of the Alts business m .Alt Fee Earnings Streams Are More Stable than TraditionalsTraditional managers earn fee revenue on flow & market dependent AUM Traditional asset managers earn fee revenue off AUM,

43、which can fluctuate from 1) in- or out-flows and 2) market performance. Market performance can oscillate wildly on macro expectations as well as stock picking abilities, but we see late-cycle risk to the space.Similarly, the shift to passive has provided a secular headwind to flow rateseven for the

44、best active traditional asset managersand since flows tend to follow performance, a cyclical downturn could have a doubly negative impact on AUM & revenue.Alternative managers earn fee revenue on committed or invested capital Unlike traditional peers, alternative asset managers earn fee revenue

45、based on committed or invested capital that tends to be permanent or locked up for years, yielding a stable base for fee revenue.The market-dependent portion of alternative asset manager revenue are the performance fees earned on realizing gains on an Alts private investments. Unlike a traditional,

46、where market up- and down-swings have an immediate and material impact on revenue, the macro risk relates more to the timeline to monetize an investment (as Alts obviously want to, and have greater patience to, buy low and sell high).Capped Downside Risk + Upside Participation from Performance FeesU

47、nlike traditionals, revenue at the Alts may not as immediately inflect higher from a market rally (though a sustained rally would have a positive impact on realizations and performance revenue), but fee revenue is stable and protected from market swings.FIGURE 3Indexed Growth of Alternative vs. Trad

48、itional Manager Revenue vs. S&P 500 Total Return26024022020018016014012010080Traditionals Net Op RevAlt Fee + Perf RevAlt Fee Only RevenueS&P Tot. Ret.Source: Barclays Research, Company Reports, Refinitiv5 August 20196Barclays | U.S. Brokers, Asset Managers & ExchangesThough Alternative

49、Asset Manager Stocks Remain ChoppyAs the bull cycle gets longer and longer in the tooth, the beta play of the traditional asset managers looks less and less attractive. The upside beta is a bit capped as investors dont want to bid-up multiples ahead of an eventual downturn, while the downside beta m

50、ay be exacerbated as investors flee to the exits (and perhaps into passive).Despite public market moves having a much lower impact on the alternative managers earnings, most of the Alt stocks have historically traded in sympathy with the overall market or inversely with credit spreads, resulting in

51、fairly volatile stocks.In 4Q18, volatile markets drove investors to pull out their 08 playbooks and sell public investments (including mutual funds & ETFs), driving down AUM at traditional asset managers by 10%. Alternatively (pun intended), each of the Alts grew AUM and committed capital despit

52、e similar stock moves to traditional peershighlighting that the beta of the alternative managers stocks is larger than the beta of the business.FIGURE 4Indexed growth of market cap: Alts vs. Traditionals vs. S&P 500 Total Return24022020018016014012010080TraditionalsAltsS&P 500 TRSource: Barc

53、lays Research, RefinitivWe are hopeful that stock volatility may begin todampen now that the five largestalternative managers have converted (or are in the process of converting) to C-Corps, as the new corporate structure should attract more institutional investors who were previously put off by bar

54、riers (or perceived barriers) associated with the old partnership structure with cumbersome K-1 tax filings.Structural Flexibility Begets Outsized PerformanceAlternatives have Greater Investment FlexibilityThe main benefit alternative asset managers have over traditional peers is their ability to ac

55、cumulate committed capital and deploy it as they choose, providing leeway to wait for attractive opportunities and invest more selectively. This is exactly what weve seen over the past couple of years as high valuations and looser lending standards (that favor borrowers) have yielded a $2 trillion b

56、uild up in dry powder.5 August 20197Barclays | U.S. Brokers, Asset Managers & ExchangesFIGURE 5Over the past decade +, alternative managers have accumulated over $2tn of dry powder they can deploy once attractive investment opportunities arise2,1112,0001,7801,5091,5001,3621,2261,2221,066 1,0559931,0009829431,00078850002006 2007 2008 20092010 2011 2012 2013 2014 2015 2016 2017 2018$bnPrivate EquityPrivate DebtReal EstateInfrastruc