Private equity firm Apollo Global Management (NYSE: APO) stock has been in a solid uptrend since recovering from its pandemic lows as it continues to all-time highs. This alternative asset manager operates over 150 companies including Chipotle (NYSE: CMG) competitor Qdoba in addition to its real estate, credit, private equity, and investment management operations. It also owns assets in the healthcare sector. The Company is a financial powerhouse that is trading at a cheaper valuation than its peers Blackrock (NYSE: BLK) and Blackstone (NYSE: BX). The Company benefits from the zero-interest rate environment but claims that rate hikes will actually boost its profits thanks to the number of businesses that benefit from rate hikes as the reopening accelerates with the spread of COVID vaccinations. The Company is also planning to merge with another private equity firm Athene (NYSE: ATH) in Q1 2022. Prudent investors seeking exposure with an active asset management leader can watch for opportunistic pullbacks in shares of Apollo Global Management.
Q2 Fiscal 2021 Earnings Release
On Aug. 4, 2021, Apollo reported its fiscal Q2 2021 earnings for the quarter that ended in June 2021. The Company reported earnings-per-share (EPS) profits of $1.14 and beating consensus analyst estimates for $0.71 by $0.43. Revenues grew 17.3% year-over-year (YoY) to $553.55 million versus $526.68 million analyst estimates. Apollo CEO Mark Rowan commented, “Our second-quarter results were very strong across all key performance metrics, headlined by record fee-related earnings and the highest quarterly distributable earnings we have generated since 2013. Our teams remain extremely active in sourcing attractive investment opportunities for our clients, with a record total capital deployment of $28 billion across our yield-centric origination platforms and our opportunistic businesses. Importantly, we are making meaningful progress on our strategy of positioning the firm for continued strong growth by building out our front-end asset origination platforms, expanding our global base of talent, and investing in leading technology to drive greater efficiency. All of this is being done to support the abundant growth opportunity in front of us and continue delivering compelling returns to all our stakeholders – now, and in the future.”
Conference Call Takeaways
CEO Rowan set the tone, “Across our opportunistic franchise and our hybrid franchise, we approach this in a contrarian, value-oriented mentality with a proven track record over a variety of market cycles over 31 years. And the results as you've seen previously are spectacular. In Yield, the largest of our segments, this is a fixed income replacement business. This is not an opportunistic credit business. Our goal in our yield segment is to produce 150 to 200 basis points of excess return over the equivalent CUSIP across the capital structure. We want to get paid in our yield business for illiquidity and complexity and origination, not for taking additional credit risk or assuming other risks that we do not intend. Again, stepping back, as we've said previously, in the broadest terms, over the next five years, I expect our yield business to double. And I expect our opportunistic and our hybrid business to be 50% larger. I believe this will take place without any significant acquisitions in our asset management segment. Although, as you will see, and Martin will address, we have ample capital to accelerate our growth if we find interesting opportunities. Last year, we added 300 people to our 1,300 person base. This year, we will add between 300 and 400 people. And I am confident that we will end the year position to support and accelerate growth into 2022. I don't want to take too much away from strategy, but I will step back and now talk a little bit about strategy as we are fortunate to be in a growth business. Almost every day the business gets better. The trends in the business are overwhelmingly favorable.”
Financial Services Segment
CEO Rowan underscored, “Apollo, one of our key strengths is in financial services, not just in the growth of our retirement services businesses, but in banking, in lending, in origination. Our business as I said is evolving. And we like our peers are ourselves a large financial institution. Changes are coming to the way products are distributed. Changes are way coming to the way we securitize and the way markets function. And changes are coming to the way we originate assets. All of these things as I said, we welcome. I believe these plays toward our strength, rather than something that we should be concerned about. During the quarter, we announced two significant ventures, one with Motive, which is a strategic investment to help position us at the forefront of FinTech and technological innovation. And the second is with Figure, which is a strategic collaboration to implement blockchain, across the investment lifecycle, particularly focused on securitization. These are not pie in the sky. These are real, tangible things that will have immediate cost benefits, data collection benefits, and other benefits to our business. Away from the three things I mentioned, a lot of interesting opportunities during the quarter, you will hear, and I will steal a little bit of Athene thunder. There is a robust stream of growth in retirement services across the platform. This year, we expect to originate at Athene north of $30 billion on an organic basis. And if trends continue, could be as much as $35 billion. Further, we made a significant minority investment joining Athene in taking a stake in Challenger. Challenger looks an awful lot like Apollo and Athene But in a fast-growing and really interesting Australian market. They are both an originator of assets, as well as the largest provider of annuity product in the Australian market.”
APO Stock Trajectories
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for APO stock. The weekly rifle chart uptrend shows a peak at the $69.00 Fibonacci (fib) level. It overshot its weekly upper Bollinger Bands (BBs) at $68.23 briefly before falling back down. The weekly uptrend has a rising 5-period moving average (MA) support level at $63.97 followed by its 15-period MA support at $60.97. The weekly stochastic has a mini pup thrusting through the 80-band. The daily rifle chart also has an uptrend with a rising 5-period MA support at $66.52 and 15-period MA at $63.65. The daily upper BBs sits at $69.92. The daily stochastic appears to have peaked at the 90-band as a potential market structure high (MSH) attempts to form. The daily market structure low (MSL) buy signal formed on the breakout through $58.09. Prudent investors can watch for opportunistic pullbacks at the $65.38, $64.45 fib, $63.20 fib, $62.28 fib, $60.20 fib, $58.95 fib, and the $57.83 fib level. Upside trajectories range from the $72.68 fib upwards to the $91.06 fib level.
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