AAPL - Apollo Global Management Is Cheap No More But It Will Not Stop The Stock

2024-02-15 11:28:25 ET

Summary

• Apollo Global stock has delivered a 28% annual IRR and almost doubled since June 2021.
• Apollo's strategy of merging with an annuity provider has been successful and replicated by other alternative asset managers.
• The valuation of Apollo is complex due to the fluctuating nature of its different segments, but a simplified model values the stock in line with its current trading price.
• While Apollo is fairly valued now, its strong organic growth should deliver stock appreciation of close to 20% based on management's forecast.
• It is quite achievable for Apollo to beat its own forecast and deliver even higher returns in 2024.

I invested in Apollo Global (APO) in June 2021 and authored my first article about it shortly after. What APO was about to do seemed rather extraordinary to me. A well-known leveraged buyout shop (aka alternative asset manager) had just announced its merger with annuity provider (aka retirement specialist that technically belongs to the life insurance industry) Athene. It made insurance a cornerstone of its new strategy. An alliance of insurance and alt management was launched to conquer the world.

Fast forward to February 2024. My readers who bought Apollo in mid-2021 should not be disappointed: the stock has delivered ~28% annual IRR including dividends and has almost doubled since. All big alt managers have either replicated Apollo's strategy or at least heavily borrowed from it. The term "private credit" is now almost as fashionable as "Magnificent Seven"....

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