Top 3 Must-Watch Stocks Dominating Alternative Asset Management!

The world of alternative and private capital asset management is not just growing; it’s thriving in ways that could reshape your investment strategy. According to recent forecasts, from 2023 to 2028, the alternative assets sector is projected to swell by a staggering $8 trillion, boasting a compound annual growth rate (CAGR) of nearly 7%. While it may not seem like a game-changer at first glance, this growth will outpace traditional asset classes. In a landscape where every percentage point counts, this means serious opportunity for savvy investors.

As a result, it’s essential to keep an eye on the key players in this burgeoning arena. Unlike traditional asset managers, firms specializing in alternative assets typically charge higher fees, creating a lucrative revenue stream that allows for expanding margins and dynamic growth.

There’s exciting news from CalPERS, the largest pension fund in the U.S., which has just approved a significant shift to increase its allocation to private capital assets to an impressive 40% of its portfolio. In light of this trend, let’s dive into three powerhouse firms leading the charge in alternative and private capital asset management.

Apollo: The Titan of Alternative Credit

Apollo Global Management APO is rocking the world of investment with its diverse strategies across both private and public markets. The company’s stock has soared in 2024, delivering a dazzling total return of 90% as of November 25. As the largest alternative credit manager globally, Apollo boasts nearly $600 billion in assets, which often involves lending to those daring private companies that traditional banks might shy away from. This higher risk translates into higher interest rates, boosting returns for investors while lining Apollo’s pockets.

Driving this success are major tailwinds, including a monumental $6 trillion increase in the Federal Reserve’s assets since 2007, which has infused the financial system with liquidity. This influx has generally made borrowing more accessible, particularly for private equity funds that lean heavily on leverage. Moreover, with U.S. pension funds facing significant underfunding, there’s a growing tilt towards alternative assets that promise to deliver robust returns.

If the fourth quarter aligns with expectations, revenues could witness a 15% year-on-year growth, with adjusted earnings per share (EPS) projected to rise by 6%. The company is ambitiously aiming to double its adjusted EPS by 2029, marking a CAGR of over 15%.

Brookfield: A Powerhouse in Renewables

Brookfield Asset Management BAM has carved its niche as a formidable player, focusing on investments in renewable energy and the transition to sustainable power. By the end of 2023, Brookfield had a jaw-dropping $102 billion dedicated to this sector, including hydroelectric dams, wind and solar farms, and cutting-edge carbon capture technologies. Their portfolio also includes significant investments in infrastructure, real estate, private equity, and credit.

As of Q3, the firm boasts $539 billion in fee-bearing assets, with revenues climbing by 25% and fee-related earnings up by 14% in the last quarter. Analysts are optimistic, forecasting adjusted EPS growth of 20% and 17% for 2025 and 2026, respectively. With aspirations to double its fee-bearing assets in the next five years, Brookfield is poised for impressive earnings and dividend growth, currently offering a solid 2.6% dividend yield—well above the 1.2% provided by the SPDR S&P 500 ETF Trust SPY over the past year.

Carlyle: Breaking Records and Setting New Standards

The Carlyle Group CG stands as a titan in the realm of alternative and private assets, deftly deploying capital across three segments: Global Private Equity, Global Credit, and Global Investment Solutions. As of Q3, Carlyle managed an impressive $447 billion in assets, with Global Private Equity and Global Credit representing 38% and 43% of that total.

Last quarter marked a significant milestone for Carlyle, as it achieved record-breaking fee-related earnings, soaring by 36% from the previous year. This surge was fueled by the stellar performance of its two largest U.S. private equity buyout funds, which both saw value increases of over 7%. The company recently celebrated its largest quarterly jump in net accrued performance revenues, a reflection of the rising value of its funds and the performance fees that follow. As of November 25, Carlyle has returned a robust 38% this year.

In conclusion, the alternative asset management landscape is vibrant and full of potential. With industry giants like Apollo, Brookfield, and Carlyle leading the charge, now is the time for investors to explore these opportunities and consider how they can diversify their portfolios for a brighter financial future.