KKR Is The Most Undervalued From The Private Equity Giants

 

On fundamental metrics like Price/Earnings ratios KKR is the most undervalued from the private equity giants, alternative investments giants Blackstone, KKR, Apollo, Carlyle and CVC, according to Wolfteam Ltd.'s analysis.

The reason is threefold:

 1) KKR pays a lower dividend in general from the other private equity giants

2) KKR's so called perpetual capital or insurance fee premiums is at a lower percentage from total capital

3) KKR's fund raising activity is somewhat smaller than that of other private equity giants.

Otherwise, KKR's strategy is similar to that of Blackstone, Apollo, Carlyle and CVC. Investing in infrastructure, also tied to AI, investing in technology and using insurance fee premiums from its insurance business lines to invest for the long-term, in short.

In short, KKR is the most undervalued from Blackstone, KKR, Apollo, Carlyle and CVC, in Wolfteam Ltd.'s view.

The Magnificent 7 Technology AI Stocks Will Continue Outperforming In 2025

 

The Magnificent 7 stocks or Apple, Microsoft, Alphabet Amazon, Meta, Tesla and Netflix outperformed the S&P 500 this year 2024 driven by the future promise of artificial intelligence, AI.

The Magnificent 7 stocks or Apple, Microsoft, Alphabet Amazon, Meta, Tesla and Netflix will outperform the S&P 500 index in 2025 again, influenced by the huge promise of artificial intelligence, AI, according to Wolfteam Ltd.'s projections and estimates. The Magnificent 7 stocks or Apple, Microsoft, Alphabet Amazon, Meta, Tesla and Netflix have heavily invested in AI. Only Apple, Microsoft, Alphabet Amazon and Meta invested around 200 billion USD in artificial intelligence, AI in 2025 alone according to various Wall Street equity research analysts estimates. AI will change our lives not only profoundly, but to a very large extent. Witness the fourth or AI driven industrial revolution.

The Magnificent 7 will outperform the S&P 500 on AI's promise, the Magnificent 7 past AI investments, in Wolfteam Ltd.'s view.

How To Value Private Equity Firms? An Alternative Perspective

 

Wall Street equity research analysts, when they model alternative investment management firms with large private equity, real estate and credit and lending investment businesses put in 0, zero for future return on investment from the investments alternative investment management firms make in their private equity, real estate and credit and lending businesses, according to Wolfteam Ltd.'s analysis.

History has proven, than on the contrary, the leading alternative asset managers like Blackstone, KKR, Carlyle, Apollo, CVC, Ares, etc. and mid market and smaller private equity firms, in general, do make nonzero returns on their investments.

One way to correct the spreadsheet modelling of alternative asset managers and their usually largest business of private equity asset management is to either input the risk free rate or the yield on the 10 year treasury or the average rate of return of the S&P 500 for the last twenty years for the alternative asset manager's future return. In this way the current models could be rectified.

As is obvious from Blackstone, KKR, Carlyle, Apollo, CVC, Ares Price/Earnings, Price/Book, Price/Sales ratios the leading private equity firms do trade at a premium on the average S&P 500 values. Which means that investors do attach a significant probability that private equity firms will make sound returns on their investments.

Blackstone, KKR, Carlyle, Apollo, CVC, Ares are still undervalued, according to Wolfteam Ltd.'s estimates.

Private Equity Investment Giants Investment Strategy

 

Blackstone, KKR, Apollo, Carlyle, CVC and other leading alternative investment management firms with private equity, real estate and credit and lending business lines are guiding their resources towards to a large extent infrastructure investments lately, according to Wolfteam Ltd.'s analysis.

Blackstone, KKR, Apollo, Carlyle, CVC etc. are looking to capitalize also on a possible AI related investments like delivery, ports, data centers and other infrastructure.

Blackstone, KKR, Apollo, Carlyle, CVC etc. are using the insurance fee premiums they get from their insurance business lines as so called perpetual capital to feed their private equity, real estate and credit and lending investments. The long-term capital from insurance is used to achieve a larger compounding effect by investing for the long-term,

Blackstone, KKR, Apollo, Carlyle, CVC are also looking to capitalize on the long-term investment cash flows that come from infrastructure investments. They have raised tens of billions of USDs and even 20 billion +  USD funds in some cases to invest in infrastructure projects for the long-term.

2025 And The Next Few Years Will Be The Years Of Private Equity. Again

 

The investment flows in private capital seem not to be abating. The leading private equity firms like Blackstone, KKR, Apollo, Carlyle, CVC, Ares etc. are raising new funds to the tune of billions and even tens of billions of USDs. 2025 and up until 2030 will be strong years for alternative investment management companies and their private equity, real estate and credit and lending businesses, according to Wolfteam Ltd.'s projections and estimates

In the previous 5 years there were large private equity buyouts, but not as big as in the 2007, 2008 run up boom years to the 2009 Great Recession.

The records from 2007, 2008 can be expected to be challenged and even broken lead by Blackstone, KKR, Apollo, Carlyle, CVC, Ares etc. and their dry powder set for new investments.

The leading private equity firms are skillfully using insurance fee premiums from their proprietary owned insurance business lines to invest in private equity, real estate, credit and lending. All this so called perpetual or long-term capital to the tunes of hundreds of billions of USDs of Blackstone, KKR, Apollo and Carlyle each for example is skillfully invested for the long therm and the private equity giants are reaping handsome gains, often exceeding the yearly return of the Standard and Poor's 500 and Nasdaq Composite, which basically is the whole idea and business promise of alternative investment management companies that invest mainly in the private markets of private equity, real estate and credit and lending facilities.

Wall Street equity research analysts model out investment returns by leading private equity firms by inputting 0, zero for future investment returns, especially from private equity. Basically, Wall Street analysts model 0, zero investment skill by the private equity, real estate and credit and lending investment managers of Blackstone, KKR, Apollo, Carlyle, CVC, Ares etc..

History has shown that this assumption of Wall Street equity research analysts is not correct, simply because Blackstone, KKR, Apollo, Carlyle, CVC, Ares etc. do make investment returns on their portfolios.

The lucrative returns of Blackstone, KKR, Apollo, Carlyle, CVC, Ares etc. in the last decade will insure more capital, revenue and profits will flow to the private equity giants resulting in even bigger mergers and acquisitions deals which could surpass the previous private equity buyouts, real estate records deal records set in 2007, 2008. And there is the new vertical of credit and lending, which will bring further profits to Blackstone, KKR, Apollo, Carlyle, CVC, Ares etc., in Wolfteam Ltd.'s view.

Blackstone And KKR Comparison

 

Blackstone Inc's net profit margin is 22 % on average for the last five years, while KKR & Co, Inc's net profit margin is 15 % for the last five years. Blackstone's dividend yield is 2.02 %, while KKR's is 0.47 %. Blackstone's Price/Earnings and Price/Ratios are significantly higher at 58.73 and 28 for 2023 compared with KKR's 45.66 and 7 for 2023. Blackstone is overvalued relative to KKR, according to Wolfteam Ltd.'s projections and estimates.

Blacktone, the leading alternative asset manager's assets under management are 1.1076 trillion USD with fee-earning assets under management of 820.5 billion USDs. Blackstone manages so called perpetual capital of 434.7 billion USDs. Such capital constitutes insurance fee premiums from Blackstone's proprietary owned insurance business. Such insurance premiums are stable, long-term in nature capital. That is why these 434.7 billion USDs of Blackstone's asset under management are called perpetual capital.

Blackstone's Real Estate assets under management:

Total AUM: $325.1 billion with inflows of $5.8 billion in the quarter and $39.8 billion over the LTM.

Blackstone's private equity assets under management:

Total AUM: Increased 12% to $344.7 billion with inflows of $10.2 billion in the quarter and $36.9 billion over the LTM.

Blackstone's credit and insurance assets under management:

Total AUM: Increased 22% to $354.7 billion with inflows of $21.4 billion in the quarter and $80.2 billion over the LTM.

MULTI-ASSET INVESTING
▪ Total AUM: Increased 9% to $83.1 billion with inflows of $3.1 billion in the quarter and $9.9 billion over the LTM.

KKR's third quarter results summary:

Assets Under Management (“AUM”) of $624 billion, up 18% year-over-year
• Fee Paying Assets Under Management (“FPAUM”) of $506 billion, up 19% year-over-year
• New Capital Raised of $24 billion in the quarter and $118 billion in the LTM
• Capital Invested of $24 billion in the quarter and $77 billion in the LTM

8
Assets Under Management
• AUM of $624 billion, up 18% year-over-year, with $24 billion of organic new capital raised in the quarter and $118 billion in the
LTM
• Fee Paying AUM of $506 billion, up 19% year-over-year, with $25 billion of organic new capital raised in the quarter and $122
billion in the LTM
• Perpetual Capital of $259 billion, up 27% year-over-year driven primarily by the organic growth of Global Atlantic. Perpetual
capital represents 42% of AUM and 50% of FPAUM

KKR has 259 billion USDs of so called perpetual assets under management sourced from its insurance and retirement subsidiary Global Atlantic which is proprietary owned by KKR. Such insurance premiums coming from Global Atlantic are long-term in nature and can be invest for the long-term.

Dry Powder: Uncalled commitments of $108 billion remain diversified across the firm’s investment strategies
• AUM Not Yet Paying Fees: At quarter end, there was $53 billion of committed capital with a weighted average management fee
rate of approximately 90 bps that becomes payable when the capital is either invested or enters its investment period
• Carry Eligible AUM: Of the $306 billion of carried interest eligible AUM, $221 billion is above cost and accruing carry
• Performance Fee Eligible AUM: $371 billion, up 13% year-over-year

KKR segments.

Private Equity:

AUM: Increased 3% quarter-over-quarter and increased 10% year-over-year to $190 billion with organic new capital raised of $2 billion in the quarter and $8 billion YTD
• New capital raised in the quarter was primarily driven by K-Series PE, private equity vehicles designed for private wealth
clients
• Ascendant, our first-time U.S. middle market traditional private equity fund, held its final close bringing the fund's total
commitments to $4.3 billion
• Realizations: Carried Interest in 3Q driven primarily by traditional private equity secondary sales and onshore K-Series investment
performance
• Capital Invested: $6 billion in the quarter and $10 billion YTD. In 3Q, deployment was driven primarily by traditional private
equity in the U.S. alongside an increase in activity globally. Deployment included a significant increase in activity by technology
growth
• Performance: The traditional private equity portfolio appreciated 17% in the LTM

Real Estate:

UM: Increased 7% quarter-over-quarter and 31% year-over-year to $163 billion with organic new capital raised of $10 billion in
the quarter and $34 billion YTD
• New capital raised in the quarter was widespread and included Global Infrastructure V, Global Atlantic inflows, Global Climate,
Real Estate Americas IV and K-Series Infrastructure, infrastructure vehicles designed for private wealth clients
• Realizations: Carried Interest in 3Q largely driven by sales from global infrastructure and opportunistic real estate in the U.S.
• Capital Invested: $8 billion in the quarter and $22 billion YTD. In 3Q, deployment was primarily driven by infrastructure in both
Europe and the U.S. as well as U.S. real estate credit and equity
• Performance: The infrastructure portfolio appreciated 18% and the opportunistic real estate portfolio appreciated 3% in the LTM

Credit And Liquid Strategies:

AUM: Increased 3% quarter-over-quarter and 18% year-over-year to $271 billion with organic new capital raised of $11 billion in
the quarter and $44 billion YTD
• New capital raised in the quarter was primarily driven by inflows at Global Atlantic, opportunistic asset-based finance,
leveraged credit SMAs, CLO formation and K-Series Credit, a series of credit vehicles designed for private wealth clients
• AUM comprised of: $129 billion of leveraged credit, $66 billion of asset-based finance, $40 billion of direct lending, $8 billion
of strategic investments and $29 billion of liquid strategies
• Capital Invested: $10 billion in the quarter and $30 billion YTD. In 3Q, deployment was most active in high grade asset-based
finance and direct lending
• Performance: The leveraged credit composite appreciated 11% and the alternative credit composite appreciated 12% in the LTM

Here is Blackstone's earnings statement:

Blackstone | 1
BLACKSTONE’S THIRD QUARTER 2024 GAAP RESULTS
▪ GAAP Net Income was $1.6 billion for the quarter and $4.1 billion year-to-date (“YTD”). GAAP Net Income
Attributable to Blackstone Inc. was $781 million for the quarter and $2.1 billion YTD.
Throughout this presentation, all current period amounts are preliminary and unaudited. Totals may not add due to rounding. See pages 36-38, Definitions and
Dividend Policy, for definitions of terms used throughout this presentation. NCI means non-controlling interests.($ in thousands, except per share data) (unaudited) 3Q'23 3Q'24 3Q'23 YTD 3Q'24 YTD 3Q'23 LTM 3Q'24 LTM
Revenues
Management and Advisory Fees, Net 1,655,443$ 1,794,894$ 5,023,128$ 5,309,355$ 6,671,566$ 6,957,487$
Incentive Fees 158,801 191,794 454,754 559,434 665,018 799,851
Performance Allocations 390,486 1,569,673 894,647 3,322,003 841,443 2,959,529
Principal Investments 163,653 93,371 (782) 675,860 38,429 377,311
Interest and Dividend Revenue 109,133 109,774 348,123 312,612 450,755 480,986
Other 63,769 (96,312) 17,951 (31,861) (225,331) (142,741)
Total Revenues 2,541,285$ 3,663,194$ 6,737,821$ 10,147,403$ 8,441,880$ 11,432,423$
Expenses
Compensation and Benefits 946,186 1,440,344 2,769,892 3,954,850 3,429,221 4,497,928
General, Administrative and Other 279,186 340,945 827,614 1,022,823 1,119,954 1,312,514
Interest Expense 110,599 111,337 323,136 328,156 423,465 436,888
Fund Expenses 38,934 3,470 118,918 13,380 137,449 13,449
Total Expenses 1,374,905$ 1,896,096$ 4,039,560$ 5,319,209$ 5,110,089$ 6,260,779$
Other Income (Loss) (49,078)$ 42,842$ 104,373$ 70,009$ 73,038$ (118,361)$
Income Before Provision for Taxes 1,117,302$ 1,809,940$ 2,802,634$ 4,898,203$ 3,404,829$ 5,053,283$
Provision for Taxes 196,560 245,303 467,504 789,220 326,358 835,177
Net Income 920,742$ 1,564,637$ 2,335,130$ 4,108,983$ 3,078,471$ 4,218,106$
Redeemable NCI in Consolidated Entities (92,577) (22,184) (81,589) (61,595) (281,179) (225,524)
Non-Redeemable NCI in Consolidated Entities 461,325 805,986 1,177,639 2,097,943 1,562,716 2,219,195
Net Income Attributable to Blackstone Inc. (''BX'') 551,994$ 780,835$ 1,239,080$ 2,072,635$ 1,796,934$ 2,224,435$
Net Income Per Share of Common Stock, Basic 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91$
Net Income Per Share of Common Stock, Diluted 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91

Here is KKR's income statement:

$ in thousands, except per share data) 3Q'23 3Q'24 3Q'23 YTD 3Q'24 YTD
Revenues
Asset Management and Strategic Holdings $ 1,665,012 $ 2,269,090 $ 4,242,390 $ 5,786,007
Insurance 1,650,469 2,522,606 5,827,091 12,834,337
Total Revenues $ 3,315,481 $ 4,791,696 $ 10,069,481 $ 18,620,344
Expenses
Asset Management and Strategic Holdings $ 1,168,348 $ 1,778,343 $ 2,950,149 $ 4,619,272
Insurance 1,147,175 2,898,662 5,347,939 13,317,006
Total Expenses $ 2,315,523 $ 4,677,005 $ 8,298,088 $ 17,936,278
Total Investment Income (Loss) - Asset Management and Strategic Holdings $ 1,819,232 $ 1,598,873 $ 2,907,245 $ 3,602,754
Income Tax Expense (Benefit) 437,210 224,896 910,912 711,066
Redeemable Noncontrolling Interests (3,685) (4,798) (12,728) 57,546
Noncontrolling Interests 895,539 838,916 1,088,622 1,513,518
Preferred Stock Dividends 17,248 — 51,747 —
Net Income (Loss) - KKR Common Stockholders $ 1,472,878 $ 654,550 $ 2,640,085 $ 2,004,690
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock
Basic $ 1.71 $ 0.74 $ 3.06 $ 2.26
Diluted $ 1.64 $ 0.69 $ 2.95 $ 2.15
Weighted Average Shares of Common Stock Outstanding
Basic 862,123,088 887,444,991 861,598,674 886,618,138
Diluted 909,056,980 941,967,479 911,716,705 933,079,377

Blackstone has stronger momentum and profitability than KKR. Both Blackstone and KKR are investing heavily in infrastructure.

All in all, however, Blackstone seems overvalued compared to KKR, in Wolfteam Ltd.'s view.

Bitcoin's Price Could Top 200 000 USD in 2025

 

After surpassing 100 000 USD's recently, Bitcoin's price experienced a correction.

One of the drivers is the Federal Reserve making hawkish comments and penciling in 'only' two Federal Funds Rate cuts for 2025. Market participants apparently were expecting more Federal Reserve rate cuts in 2025 and altogether looser monetary policy in Wolfteam Ltd.'s view.

Apparently, Federal Reserve's Chairman and voting and non-voting Monetary Policy Committee Members are modelling higher inflation influenced to a large extent by possible tariffs and quotas to be plausibly announced by President Elect Donald Trump's incoming administration.

However, President Elect Donald Trump via many comments and announced SEC and Crypto and AI Tzar nominations has signaled strong support for Bitcoin and cryptocurrencies. There could be even a US reserve consisting of Bitcoin and possible other cryptocurrencies.

Donald Trump's actions, the possibly relatively looser Federal Reserve monetary policy and general amicable public towards Bitcoin and cryptocurrencies, crypto for short could drive Bitcoin's price to above 200 000 USD in 2025, according to Wolfteam Ltd.'s projections and estimates.

Ares Management Third Quarter 2024 Earnings Analysis

 

Ares Management Corp, the leading alternative investment manager reported strong third quarter 2024 earnings results. Ares Management is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Ares reported 280.653 million USDs in net income on 1.129739 billion USDs in revenue for the third quarter of 2024.

Of the 463.8 billion USDs in assets under management 124.1 billion USD are so called perpetual capital from mainly the proprietary owned Ares Management insurance business.

Like other leading private equity firms as Blackstone, KKR, Apollo, Carlyle etc. Ares Management owns an insurance business and uses the so called perpetual or long-term capital of insurance fees premiums the insurance business provides to invest in its credit, real estate and secondaries groups.

This ingenious usage of long-term capital enables Ares Management to invest hundreds of billions of USDs in long-term, otherwise called perpetual capital and earn income on it for 10 years +.

Wall Street equity research analysts, when they build models of private equity investment management firms' income statement, balance sheet and cash flow statements assume that leading private equity firms will not earn any investment income on their managed capital piles. Wall Street research analysts model that by inputting 0, zero as investment gains in their Excel investment models.

History has shown that the aforementioned assumption is by and large erroneous and leading private equity firms do return capital on their investment capital. Lately helped by the long-term nature or perpetual insurance fee premiums.

Ares is a case in point with 124.1 billion in invested perpetual capital from insurance fees is a case in point.

4
Three months ended September 30, Nine months ended September 30,
$ in thousands, except share data 2024 2023 2024 2023
Revenues
Management fees $753,597 $637,517 $2,162,970 $1,853,304
Carried interest allocation 277,651 (28,126) 194,006 541,828
Incentive fees 48,638 16,454 105,039 33,327
Principal investment income 8,036 9,339 44,547 38,985
Administrative, transaction and other fees 41,817 36,071 119,222 110,459
Total revenues 1,129,739 671,255 2,625,784 2,577,903
Expenses
Compensation and benefits 435,876 367,502 1,268,685 1,095,833
Performance related compensation 219,697 (25,448) 140,180 401,990
General, administrative and other expenses 197,019 211,842 537,379 501,340
Expenses of Consolidated Funds 2,295 7,064 11,680 28,171
Total expenses 854,887 560,960 1,957,924 2,027,334
Other income (expense)
Net realized and unrealized gains (losses) on investments (5,074) (1,770) 13,781 5,226
Interest and dividend income 7,553 4,752 19,952 11,281
Interest expense (29,733) (25,975) (105,057) (76,800)
Other income (expense), net (18,805) 5,742 (19,473) (1,068)
Net realized and unrealized gains on investments of Consolidated Funds 64,831 79,591 192,778 188,717
Interest and other income of Consolidated Funds 234,681 255,600 732,316 712,992
Interest expense of Consolidated Funds (201,199) (201,363) (626,678) (540,954)
Total other income, net 52,254 116,577 207,619 299,394
Income before taxes 327,106 226,872 875,479 849,963
Income tax expense 46,453 29,898 114,760 113,418
Net income 280,653 196,974 760,719 736,545
Less: Net income attributable to non-controlling interests in Consolidated Funds 64,241 80,289 236,446 174,663
Net income attributable to Ares Operating Group entities 216,412 116,685 524,273 561,882
Less: Net income (loss) attributable to redeemable interest in Ares Operating Group entities 1,319 758 1,005 (332)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 96,633 54,104 236,843 261,838
Net income attributable to Ares Management Corporation Class A and non-voting common
stockholders $118,460 $61,823 $286,425 $300,376
Net income per share of Class A and non-voting common stock:
Basic $0.55 $0.30 $1.31 $1.54
Diluted $0.55 $0.30 $1.31 $1.54
Weighted-average shares of Class A and non-voting common stock:
Basic 200,724,068 186,218,638 196,526,832 182,757,955
Diluted 200,724,068 186,218,638 196,526,832 182,757,955

Perpetual Capital
Perpetual Capital AUM
Perpetual Capital as of September 30, 2024 was $124.1 billion, an increase of 20% from prior year
• The increase of $20.4 billion was primarily driven by:
◦ commitments to certain funds and SMAs in our alternative credit and U.S. and European direct lending strategies;
◦ capital raised by our business development companies, AESIF and APMF; and
◦ additional managed assets from our insurance platform

Ares Management's intrinsic worth is 70 billion USD compared with Ares Management's current market capitalization of 52.98 billion USD, according to Wolfteam Ltd.'s projections and estimates.

CVC Capital Partners Half Year 2024 Report Analysis

CVC Capital Partners, the global leader in private markets reported strong half year 2024 results.

Based on its H1 2024 report, CVC Capital Partners, CVC is undervalued, according to Wolfteam Ltd.'s projections and estimates.

CVC has 142 billion EURs in fee paying assets under management, 638 million EURs statutory revenue and 138 million EURs statutory EBITDA for H1 2024.

Fundraising was also strong with the following statistics:

Fundraising
– Total AUM reached €193bn.
– FPAUM increased from €98.2bn as at 31 December
2023 to €142.4bn as at 30 June 2024, or +45%, mainly
driven by the activation of Europe / Americas Fund IX
and Asia VI, and the inclusion of Infrastructure1.
– €7.4bn of capital raised2 in H1 2024 across all
strategies, including initial closes for SOF VI and
Growth III.

Here is the statutory statement of profit or loss in (000) EURs

Financial Review (continued)
Statutory statement of profit or loss (€ 000) Jun-24 Jun-23
Management fees 443,739 365,713
Carried interest and performance fees 108,725 87,531
Investment income 83,274 49,295
Other operating income 2,491 1,033
Total revenue 638,229 503,572
Advisory fee expense – (210,744)
Personnel expenses (182,493) (27,568)
General and administrative expenses (106,757) (31,561)
Change in valuation of forward liability (209,420) (58,762)
Foreign exchange (losses)/gains (191) 2,169
Expenses with respect to investment vehicles (1,609) (137)
EBITDA 137,759 176,969
Depreciation and amortisation (33,580) (12,923)
Total operating profit 104,179 164,046
Finance income 4,400 5,971
Finance expense (22,495) (13,688)
Profit before income tax 86,084 156,329
Income tax charge (6,049) (8,545)
Profit after income tax 80,035 147,784
Attributable to:
Equity holders of the parent 44,794 136,330
Non-controlling interests 35,241 11,454

CVC's intrinsic value is 37 billion EURs, compared to CVC's current market capitalization of 24.96 billion EURs.

CVC Capital Partner's capital raising activity is particularly strong as in the last 12 months to 30 June 2024 Europe /
Americas Fund IX closed at €26.8bn3 (Jul-23) and
Asia VI closed at $6.8bn (Feb-24).

CVC's strong capital raising activity currently mainly drives CVC Capital Partner's value.

The US Stock Market Hangs On AI's Development

 

Many Wall Street research analysts claim US stock markets are overvalued and we are due if not for a correction, than for a slowdown in the growth of the S&P 500, DJIA, Nasdaq Composite indices.

The outcome for the US stock market is now like a payoff of an American call option on the development of artificial intelligence, AI. If AI goes on taking the world by storm US stock market indices will go on growing strong, according to Wolfteam Ltd.'s projections and estimates.

In addition, the Federal Reserve monetary policy remains accomodative.

To a large extent, AI's future development depends largely on the mainly large technology companies' investment prowess, especially the AI investments.

The Private Markets Boom Is Set To Continue On Deregulation

 

The world is experiencing a boom in private assets. Private equity and private credit are booming as regulation moved the proprietary risk from the investment and corporate banks into alternative asset management firms like Blackstone, KKR, Apollo, Carlyle, CVC etc. and also driven by other factors as abundant liquidity, talent abundance and money inflows.

The private markets boom will continue for at least 5-7 years more, according to Wolfteam Ltd.'s projections and estimates.

The private equity side of the business stands to benefit tremendously.

AI Support Stocks

Technology stocks which products supply/support AI data centers, AI computer chips production, AI data centers cooling systems and other AI supporting technology or firms that are producing the 'picks and shovels' for the current AI gold rush could see possibly their market capitalization triple in value, according to Wolfteam Ltd.'s projections and estimates.

AI support stocks are Credo Technology Group Holding Ltd, ZJK Industrial Co Ltd., Applied Optoelectronics Inc, Celestica Inc., etc. The stocks of Credo Technology and ZJK Industrial Co jumped a lot on December 2nd after NVIDIA, the main AI technology boom stock announced deals to provide cooling systems and nuts and bolts for its data centers technology with them.

ZJK Industrial quadrupled in value in just one day on the 3rd of December.

The producers of the picks and shovels for the current AI gold rush could benefit more and their market capitalization could rise several times in the next 3-5 years, according to Wolfteam Ltd.'s projections and estimates.

Artificial intelligence, AI is transforming our lives and is here to stay. The boom could go temporarily bust, however in the next 5-7 years. But the underlying AI technology will go on changing our business and personal lives, in Wolfteam Ltd.'s view.

CVC Capital Partners Is Undervalued On The Private Equity Boom

 

CVC Capital Partners PLC, the alternative assets management firm is undervalued on the current boom in private equity, private credit and infrastructure investments, according to Wolfteam Ltd.'s projections and estimates.

With 118 billion EURs of assets under management in private equity in  Europe and Asia, 14 billion EURs in secondaries, 43 billlion EURs in credit assets, and 18 billion EURs in infrastructure assets, 193 billion EURs of assets under management altogether according to its half year 2024 report, CVC is well poised to benefit from the current boom in private equity, private credit, infrastructure assets or private assets altogether.

According to its half year 2024 report CVC poste strong operating profit, net profit and revenue results:

Key financials
Statutory measures
– Total revenue increased to €638m (H1 2023:
€504m) primarily due to the inclusion of two
months of CVC Credit revenue, and an increase in
management fees following the activation of
Europe / Americas Fund IX and Asia VI.
– EBITDA decreased to €138m (H1 2023: €177m) due
to an increase in the valuation of the forward
liability of €151m, partially offset by the increase in
revenue. The forward liability represents the value
of the Group’s obligation to acquire the remaining
40% interest in Glendower Capital. The value of the
liability reflects the value of the shares issued to the
sellers of Glendower Capital. This value has
increased over the Jun-24 period in line with the
increase in the share price of CVC Capital Partners
plc. This obligation was settled by the issue of
shares of CVC Capital Partners plc on 10 May 2024
and 2 July 2024.
– Profit after income tax decreased to €80m
(H1 2023: €148m) due to the factors explained
previously, as well as an increase in depreciation
and amortisation on acquired intangible assets,
and an increase in finance expenses. Refer to
page 14 for further information.

Below is the state of comprehensive income report of CVC Capital Partners:

Financial Review (continued)
Statutory statement of profit or loss (€ 000) Jun-24 Jun-23
Management fees 443,739 365,713
Carried interest and performance fees 108,725 87,531
Investment income 83,274 49,295
Other operating income 2,491 1,033
Total revenue 638,229 503,572
Advisory fee expense – (210,744)
Personnel expenses (182,493) (27,568)
General and administrative expenses (106,757) (31,561)
Change in valuation of forward liability (209,420) (58,762)
Foreign exchange (losses)/gains (191) 2,169
Expenses with respect to investment vehicles (1,609) (137)
EBITDA 137,759 176,969
Depreciation and amortisation (33,580) (12,923)
Total operating profit 104,179 164,046
Finance income 4,400 5,971
Finance expense (22,495) (13,688)
Profit before income tax 86,084 156,329
Income tax charge (6,049) (8,545)
Profit after income tax 80,035 147,784
Attributable to:
Equity holders of the parent 44,794 136,330
Non-controlling interests 35,241 11,454

CVC Capital Partners PLC has raised the largest alternative assets management private equity fund globally at 26.8 billion EURs, which speaks to the fund raising strength of CVC Capital Partners PLC:

Fundraising
– Total AUM reached €193bn.
– FPAUM increased from €98.2bn as at 31 December
2023 to €142.4bn as at 30 June 2024, or +45%, mainly
driven by the activation of Europe / Americas Fund IX
and Asia VI, and the inclusion of Infrastructure1.
– €7.4bn of capital raised2 in H1 2024 across all
strategies, including initial closes for SOF VI and
Growth III.
– Six funds are currently in the market, and
fundraising is progressing according to plan.
– We launched our first semi-liquid vehicle
(CVC-CRED) in March (c.€0.3bn of aggregate
capital as at 30 June3) and we are working on our
first semi-liquid Private Equity vehicle.

CVC Capital partner's intrinsic value is 37 billion EURs, compared to CVC's current market capitalization of 24.60 billion EURs., according to Wolfteam Ltd.'s projections and estimates.

Ares Management Corp Is Undervalued On Private Credit, Private Equity Boom

 

Ares Management Corp., the global alternative assets investment manager is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Ares' assets are concentrated in private credit and private equity. Private credit especially is going through a boom phase helped by easing of regulation, in the future even more so as President elect Donald Trump has vowed to deregulate financial services.

Ares Management Corp reported strong third quarter 2024 results again showing that Ares is riding the private credit, real estate, private equity and infrastructure boom. 

More and more money is moving in private assets, which fans currently a boom, soon to be a bubble, in Wolfteam Ltd.'s view. Soon can be defined in the next 5-7 years.

Ares has specialized in private credit, with Ares having an intrinsic worth of 70 billion USD compared with Ares' current market capitalization of 56.01 billion USD, in Wolfteam Ltd.'s view.

AI Stocks Could Triple From Current Levels

 

AI stocks like NVIDIA, Microsoft, Meta, CLS, Amazon, Alphabet could triple from current levels on the current AI boom. The current boom may well turn into a bubble, which bursts later to tears, but the 'music is still playing' and everybody seems to be dancing.

The promise of AI could bring foundation to overvalued levels of valuation multiples like Price/Earnings, Price/Sales, Price/Book.

NVIDIA Valuation On The Current AI Hype

 

NVIDIA Corp, the AI GPUs computer chips manufacturer could end up being worth 7 trillion USD in market capitalization in view of the current artificial intelligence, AI hype, according to Wolfteam Ltd.'s projections and estimates.

The demand for NVIDIA's AI computer and server chips seems insatiable. Artificial intelligence, AI calculations require ever increasing huge amounts of computer super power coupled with tremendous energy requirements. And NVIDIA seems up to the challenge to innovate, increase the number of transistors in the computer chips it produces to be in line with the huge and ever growing demand. Currently

In the last five quarters NVIDIA's has grown its revenue with 140 % year in year on average. This is a nascent, small, possibly changing the world technology startup type of growth. That is why NVIDIA sports such lofty Price/Earnings ratio of 54.47 and Price/Sales ratio of 30. Because NVIDA seems the only computer chips production company on the market, currently, able to innovate fast enough and produce the AI computer and server chips with the required super power, NVIDIA is able to charge hefty prices and thus achieve super high net profit margin of 53 % in the last five rolling quarter.

So NVDIA's profitability in tandem with its high revenue growth determines NVIDIA's high valuation multiples and stunning, world leading market capitalization of 3.35 trillion USDs.

NVIDIA, if it continues to innovate so fast and ride the current AI boom could even surpass 10 trillion USDs of market capitalization as long as the artificial intelligence, AI boom continues. If for some binary event, government intervention, whatever the AI booms suddenly stops NVIDIA's market capitalization could fall below 1 trillion USDs in a matter of months, in Wolfteam Ltd.'s view.

Private Equity Firms Are Undervalued On Possible Long-Term Capital Appreciation

 

Wall Street research equity research analysts, when they build MS Excel models for the leading private equity firms Blackstone, KKR, Appolo, Carlyle etc. earnings statement, balance and cash flows Wall Street equity research analysts put in 0, zero for the for the private equity firms' possible return on investments from their mainly private equity investments. Wolfteam Ltd.

Wall Street research analysts put also 0, zero for the private equity firms Blackstone, KKR, Appolo, Carlyle etc. return on investment from their real estate, credit and lending investments.

History, however, clearly shows that private equity firms Blackstone, KKR, Appolo, Carlyle etc. do make returns on their investment capital.

Having the Wall Street equity research analysts' MS Excel models and forecasts in mind, this makes private equity firms Blackstone, KKR, Appolo, Carlyle etc. undervalued, according to Wolfteam Ltd.'s projections and estimates.

Private Equity Firms Are Undervalued On Regulation

 

Private equity firms are still undervalued on the fact that proprietary investments are still gradually moving away from investment and corporate banks to private equity firms, private credit and lending firms, according to Wolfteam Ltd.'s projections and estimates.

Private equity firms are less regulated which allows them to invest in nonpublic investments for the long-term via taking proprietary investments positions and thus compounding their returns better than their more strictly regulated competitors investment banks.

Thus via higher risk taking private equity firms achieve higher returns and high market capitalization and higher valuations than their investment bank counterparts. 

Of course, there is the probability that private equity firms' investments are overvalued. Until there is a possible regulatory reset, though, private equity firms are going to be very successful, in Wolfteam Ltd.'s view.

Robinhood Markets Is Undervalued On Bitcoin and Deregulation

Robinhood markets, the stocks, derivatives, fixed income and cryptocurrencies brokerage is undervalued on Bitcoin, other currencies price appreciation and possible deregulation efforts by the President elect Donald Trump incoming administration, according to Wolfteam Ltd.'s estimates.

Robinhood markets' intrinsic value is 90 billion USD, compared to Robinhood markets' current market capitalization of 32.27 billion USD, in Wolfteam Ltd.'s view.

Coinbase Is Undervalued On Possible Broad Cryptocurrencies Adoption On Wealth Effects

Coinbase Global Inc, the cryptocurrencies exchange is undervalued on the possibility of Bitcoin reaching and surpassing 200 000 USD in 2025 on broader adoption due to measures, which Donald Trump's administration could undertake, according to Wolfteam Ltd.'s projections and estimates.

Coinbase's market capitalization could surpass 400 billion USD, compared with Coinbase's current market capitalization of 76.27 billion USD.

With Bitcoin's possible broader adoption there could be many more initial coin offerings, ICO's which cryptocurrencies tokens could begin trading on the Coinbase exchange and thus raise dramatically Coinbase's revenues and profits.

As Bitcoin's price increased by more than 50 % from 68 317 USD to 99 266 USD after the US presidential election, there is bound to be more Bitcoin adoption by the general public on possible wealth creation opportunities, in Wolfteam Ltd.'s view.

Apollo Global Management Third Quarter 2024 Earnings Statement Analysis

  

Apollo Global Management reported strong third quarter 2024 earnings:

Apollo continues to reinvest the long-term perpetual capital insurance premiums fees from its insurance business into its private equity and credit business lines. The long-term in nature insurance premiums fee help Apollo generate long-term capital appreciation.

Wall Street investment research analysts put 0, zero to model future investment returns in their financial models of Apollo, KKR, Carlyle, Blackstone and other alternative asset management businesses with large private equity businesses. Apollo's investment track record clearly shows that such an assumption is farfetched.

Apollo is undervalued, according to Wolfteam Ltd.'s projections and estimates. Apollo's intrinsic value is double Apollo's current market capitalization of 101.25 billion USD.

(In millions, except per share amounts) 3Q'23 2Q'24 3Q'24 YTD'23 YTD'24
Revenues
Asset Management
Management fees $462 $462 $476 $1,328 $1,376
Advisory and transaction fees, net 157 267 181 482 617
Investment income (loss) 292 278 230 882 910
Incentive fees 18 47 35 59 108
Retirement Services
Premiums 26 673 389 9,163 1,163
Product charges 217 251 267 622 756
Net investment income 3,166 3,804 4,101 8,726 11,481
Investment related gains (losses) (2,624) (134) 1,539 (1,193) 3,082
Revenues of consolidated variable interest entities 318 366 552 946 1,329
Other revenues 563 4 3 583 9
Total Revenues 2,595 6,018 7,773 21,598 20,831
Expenses
Asset Management
Compensation and benefits (557) (604) (605) (1,743) (1,876)
Interest expense (36) (53) (55) (98) (159)
General, administrative and other (220) (319) (326) (643) (885)
Retirement Services
Interest sensitive contract benefits (333) (1,824) (2,599) (3,634) (7,307)
Future policy and other policy benefits (368) (1,095) (793) (10,346) (2,431)
Market risk benefits remeasurement gains (losses) 441 16 (524) 166 (354)
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (211) (227) (244) (502) (678)
Policy and other operating expenses (467) (478) (670) (1,356) (1,601)
Total Expenses (1,751) (4,584) (5,816) (18,156) (15,291)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities (32) (21) 15 (14) 33
Net gains (losses) from investment activities of consolidated variable interest entities 49 1 44 95 70
Other income (loss), net 22 24 70 102 68
Total Other Income (Loss) 39 4 129 183 171
Income (loss) before income tax (provision) benefit 883 1,438 2,086 3,625 5,711
Income tax (provision) benefit (243) (261) (317) (697) (1,000)
Net income (loss) 640 1,177 1,769 2,928 4,711
Net (income) loss attributable to non-controlling interests 42 (324) (958) (637) (1,620)
Net income (loss) attributable to Apollo Global Management, Inc. 682 853 811 2,291 3,091
Preferred stock dividends (22) (25) (24) (22) (73)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $660 $828 $787 $2,269 $3,018
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $1.10 $1.36 $1.30 $3.77 $4.96
Net income (loss) attributable to Common Stockholders - Diluted $1.10 $1.35 $1.29 $3.75 $4.94
Weighted average shares outstanding – Basic 579 587 585 581 587
Weighted average shares outstanding – Diluted 579 590 589 582 590

Bitcoin Could Surpass 200 000 USD In 2025

Bicoin's price, driven by wider acceptance and less regulation could surpass 200 000 USD in 2025.

Bitcoin stocks like Coinbase, Robinhood Markets and Microstrategy could triple in value in 2025, according to Wolfteam Ltd.'s projections and estimates.

Global Private Equity Fund Management Companies Are Undervalued On Wall Street Research And Intrinsic Factors

 

Global private equity fund management companies like Blackstone, KKR, Apollo, Carlyle, Permira, CVC etc. are undervalued on Wall Street research reports and other intrinsic factors, according to Wolfteam Ltd.'s projections and estimates.

Wall Street equity research analysts model 0, zero for the return on investment on global private equity investment management companies to reflect the possible return on investment of these companies investments in private and public companies via private equity leveraged buyout types of investment. Historic returns on investments of the private equity investments of global private equity investment management companies clearly show such an assumption by Wall Street research analysts is not entirely correct.

Global private equity fund management companies like Blackstone, KKR, Apollo, Carlyle, Permira, CVC etc. do generally make return on investment from their private equity type leveraged buyout investments.

Other intrinsic reasons why global private equity fund management companies like Blackstone, KKR, Apollo, Carlyle, Permira, CVC etc. are undervalued is the fact that Wall Street does not appreciate fully the fact that Global private equity fund management companies like Blackstone, KKR, Apollo, Carlyle, Permira, CVC etc. are using insurance fees premiums from the insurance businesses they own to invest for long-term capital appreciation in their private equity, real estate and private credit and lending asset management divisions. The long-term insurance fees make for easier long-term investment compounding and capital appreciation.

In addition to the above, regulators have pushed risky proprietary investments away from investment banks and corporate and savings banks into private capital firms like global private equity fund management companies like Blackstone, KKR, Apollo, Carlyle, Permira, CVC etc, which are constantly raising astounding tens of billions of USDs sums to invest on behalf of pension funds, endowments and affluent individuals, which drives their revenues, profits and ultimately market capitalization higher.

Global private equity fund management companies like Blackstone, KKR, Apollo, Carlyle, Permira, CVC etc. could double in value from current levels, in Wolfteam Ltd.'s view.

 

Carlyle Third Quarter 2024 Earnings Analysis

 

Carlyle Group Inc., the global alternative investment management group reported strong third quarter 2024 earnings with revenue tripling and net income more than quintupling in the third quarter of 2024 compared to the second quarter of 2024, according to Wolfteam Ltd.'s projections and estimates:

Dollars in millions, except per share amounts) 3Q'23 3Q'24 YTD 3Q'23 YTD 3Q'24
REVENUES
Fund management fees $ 502.6 $ 532.7 $ 1,511.2 $ 1,590.7
Incentive fees 21.1 38.7 61.9 96.2
Investment income (loss), including performance allocations (17.7) 1,831.5 (99.2) 2,033.9
Revenue from consolidated entities 152.7 180.1 411.7 510.6
All other revenues 57.9 52.2 152.1 161.9
Total Revenues 716.6 2,635.2 2,037.7 4,393.3
EXPENSES
Cash-based compensation and benefits 267.6 207.5 798.4 635.7
Equity-based compensation 64.4 121.6 186.8 355.1
Performance allocations and incentive fee related compensation (53.9) 1,151.0 (40.4) 1,222.4
General, administrative and other expenses 143.0 176.6 470.7 512.2
Expenses from consolidated entities 102.5 162.0 298.3 438.7
Interest and other non-operating expenses 31.5 30.2 92.0 91.3
Total Expenses 555.1 1,848.9 1,805.8 3,255.4
Net investment income (loss) of consolidated funds (9.3) 2.5 9.9 (9.6)
Income (loss) before provision for income taxes1 152.2 788.8 241.8 1,128.3
Provision (benefit) for income taxes 41.2 173.1 68.2 264.5
Net income (loss) 111.0 615.7 173.6 863.8
Net income attributable to non-controlling interests 29.7 20.0 90.0 54.3
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ 81.3 $ 595.7 $ 83.6 $ 809.5
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ 0.23 $ 1.67 $ 0.23 $ 2.26
Diluted $ 0.22 $ 1.63 $ 0.23 $ 2.21
Income (loss) before provision for taxes margin2 21.2 % 29.9 % 11.9 % 25.7 %
Effective tax rate 27.1 % 21.9 % 28.2 % 23.4 %
Net performance revenues3 $ (64.4) $ 634.5 $ (163.9) $ 604.3

One of the best quarterly results in Carlyle Group Inc.'s history was generated partly by previous strategic decisions like investing the long-term insurance fees for the long-term in private equity, real estate and credit business lines,  partly to pick up in investment activity.

Assets Under
Management
• Total Assets Under Management: $447 billion, up 17% year-over-year
• Fee-earning Assets Under Management: $314 billion, up 15% year-over-year
• Perpetual Capital Fee-earning AUM: $95 billion, representing 30% of total Fee-earning AUM
• Pending Fee-earning AUM: $21 billion, up 101% year-over-year
• Available Capital for investment: $85 billion, up 20% year-over-year

So called perpetual capital fee-earning Assets Under Management, AUM or 95 billion USD constitutes 30 % of total fee-earning AUM. The long-term insurance fees from Carlyle's proprietary insurance business provides for flexibility in investing securing long-term capital appreciation.  Private equity firms' long-term capital appreciation is underappreciated by Wall Street research analysts who put in 0, zero for the possible future investment returns from mainly the private equity business investments of the largest global alternative investment management firms.

Blackstone, KKR, Apollo, Carlyle and other alternative asset managers, mainly with private equity business lines have shown time and time again such assumptions by Wall Street equity research analysts are simply not entirely correct.

Fundraising by Carlyle was also strong:

Fundraising was $8.8 billion in Q3 2024, driven by additional commitments raised in our latest U.S. Real Estate fund, as well as capital
raised across our Global Credit and Global Investment Solutions segments. Fundraising of $43.5 billion for the LTM increased 73%
compared to the prior LTM period
• Invested Capital in carry funds was $3.9 billion in Q3 2024, led by investment activity in our Secondaries & Portfolio Finance and Co-
Investment strategies as well as our Opportunistic Credit and Real Estate funds. Invested Capital of $20.0 billion for the LTM
increased 3% compared to the prior LTM period
• Realized Proceeds from carry funds were $6.8 billion in Q3 2024, driven by realizations in our U.S. Buyout, Europe Technology, and
Opportunistic Credit funds, as well as in our Primary Investments strategy in Global Investment Solutions. Realized Proceeds of $23.8
billion for the LTM were flat compared to the prior LTM period

Carlyle Group Inc.'s main business line private equity did good during the third quarter of 2024:

17
Global Private Equity
• Total AUM was $169 billion as of September 30, 2024, up 3% from the prior
quarter as Q3 2024 Fundraising of $3.7 billion and portfolio appreciation
more than offset realizations. Fundraising in Q3 2024 was primarily driven
by our latest U.S. Real Estate fund. Total AUM increased 5% from the prior
year, including LTM Fundraising of $13.1 billion
• Invested Capital was $1.6 billion in Q3 2024 and $7.2 billion for the LTM.
Q3 2024 activity was driven by our Real Estate strategy, the purchase of
KFC Holdings Japan, Ltd. (CJP IV / CAP V), and follow-on activity across
the segment
• Realized Proceeds totaled $4.1 billion in Q3 2024 and $14.7 billion for the
LTM. Notable Q3 2024 realization activity included SER Group (CETP III),
Tokiwa Corporation (CJP III), and PNB Housing Finance Limited (CAP IV) 

Private equity assets under management comprise around 34 % of Carlyle's assets under management and Carlyle is showing stable investment prowess in investing in private equity deals.

Global Credit, the hottest asset class currently also reflects 194 billion USD or circa 40 % Carlyle's total 447 billion USD assets under management and is performing strongly for Carlyle:

Credit fundraising was strong and liquid credit CLO's performed nicely for Carlyle as well:

Global Credit
• Total AUM was $194 billion as of September 30, 2024, up 2% quarter-over-
quarter, as market activity and Fundraising of $2.8 billion more than offset
outflows. Fundraising activity reflects capital raised across the platform,
notably in our Direct Lending and Opportunistic Credit funds. Total AUM
increased 30% from one year ago, including $18.7 billion of Fundraising and
inflows of $24 billion from Fortitude’s transaction with Lincoln Financial in
the LTM
• Invested Capital in traditional carry funds was $0.6 billion in Q3 2024 and
$3.5 billion for the LTM
• Liquid Credit closed five CLO resets in Q3 2024, covering $2.8 billion in
AUM. For the LTM, Liquid Credit issued seven new CLOs for $3.3 billion and
closed 12 CLO resets covering $6.2 billion in AUM. Direct Lending had gross
originations of $1.3 billion in Q3 2024 and $3.9 billion LTM
• Realized Proceeds in traditional carry funds totaled $1.0 billion in Q3 2024
and $3.2 billion for the LTM

Blackstone Third Quarter Earnings Analysis

 

Blackstone reported excellent third quarter 2024 earnings:

Blackstone insurance and private equity based strategy is yielding good results, according to Wolfteam Ltd.'s projections and estimates.

Wall Street equity research analysts keep writing in 0 (zero) for return on investment in their equity research models, when they model private equity firms like Blackstone. In short, Wall Street equity research analysts assume Blackstone and other private equity firms will not make a return on their private equity investments. History has shown this to be not an entirely exact assumption.

($ in thousands, except per share data) (unaudited) 3Q'23 3Q'24 3Q'23 YTD 3Q'24 YTD 3Q'23 LTM 3Q'24 LTM
Revenues
Management and Advisory Fees, Net 1,655,443$ 1,794,894$ 5,023,128$ 5,309,355$ 6,671,566$ 6,957,487$
Incentive Fees 158,801 191,794 454,754 559,434 665,018 799,851
Performance Allocations 390,486 1,569,673 894,647 3,322,003 841,443 2,959,529
Principal Investments 163,653 93,371 (782) 675,860 38,429 377,311
Interest and Dividend Revenue 109,133 109,774 348,123 312,612 450,755 480,986
Other 63,769 (96,312) 17,951 (31,861) (225,331) (142,741)
Total Revenues 2,541,285$ 3,663,194$ 6,737,821$ 10,147,403$ 8,441,880$ 11,432,423$
Expenses
Compensation and Benefits 946,186 1,440,344 2,769,892 3,954,850 3,429,221 4,497,928
General, Administrative and Other 279,186 340,945 827,614 1,022,823 1,119,954 1,312,514
Interest Expense 110,599 111,337 323,136 328,156 423,465 436,888
Fund Expenses 38,934 3,470 118,918 13,380 137,449 13,449
Total Expenses 1,374,905$ 1,896,096$ 4,039,560$ 5,319,209$ 5,110,089$ 6,260,779$
Other Income (Loss) (49,078)$ 42,842$ 104,373$ 70,009$ 73,038$ (118,361)$
Income Before Provision for Taxes 1,117,302$ 1,809,940$ 2,802,634$ 4,898,203$ 3,404,829$ 5,053,283$
Provision for Taxes 196,560 245,303 467,504 789,220 326,358 835,177
Net Income 920,742$ 1,564,637$ 2,335,130$ 4,108,983$ 3,078,471$ 4,218,106$
Redeemable NCI in Consolidated Entities (92,577) (22,184) (81,589) (61,595) (281,179) (225,524)
Non-Redeemable NCI in Consolidated Entities 461,325 805,986 1,177,639 2,097,943 1,562,716 2,219,195
Net Income Attributable to Blackstone Inc. (''BX'') 551,994$ 780,835$ 1,239,080$ 2,072,635$ 1,796,934$ 2,224,435$
Net Income Per Share of Common Stock, Basic 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91$
Net Income Per Share of Common Stock, Diluted 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91

Blackstone's strategy of investing long-term insurance fees from its proprietary insurance companies investments into private equity seems to be showing excellent results. In addition, Blackstone is showing savvy in managing its private equity, real estate and credit and insurance assets under management.

Apollo Is Undervalued

 

Apollo is undervalued on long-term investment of insurance fees, according to Wolfteam Ltd.'s projections and estimates.

Apollo recorded excellent third quarter 2024 earnings:

(In millions, except per share amounts) 3Q'23 2Q'24 3Q'24 YTD'23 YTD'24
Revenues
Asset Management
Management fees $462 $462 $476 $1,328 $1,376
Advisory and transaction fees, net 157 267 181 482 617
Investment income (loss) 292 278 230 882 910
Incentive fees 18 47 35 59 108
Retirement Services
Premiums 26 673 389 9,163 1,163
Product charges 217 251 267 622 756
Net investment income 3,166 3,804 4,101 8,726 11,481
Investment related gains (losses) (2,624) (134) 1,539 (1,193) 3,082
Revenues of consolidated variable interest entities 318 366 552 946 1,329
Other revenues 563 4 3 583 9
Total Revenues 2,595 6,018 7,773 21,598 20,831
Expenses
Asset Management
Compensation and benefits (557) (604) (605) (1,743) (1,876)
Interest expense (36) (53) (55) (98) (159)
General, administrative and other (220) (319) (326) (643) (885)
Retirement Services
Interest sensitive contract benefits (333) (1,824) (2,599) (3,634) (7,307)
Future policy and other policy benefits (368) (1,095) (793) (10,346) (2,431)
Market risk benefits remeasurement gains (losses) 441 16 (524) 166 (354)
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (211) (227) (244) (502) (678)
Policy and other operating expenses (467) (478) (670) (1,356) (1,601)
Total Expenses (1,751) (4,584) (5,816) (18,156) (15,291)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities (32) (21) 15 (14) 33
Net gains (losses) from investment activities of consolidated variable interest entities 49 1 44 95 70
Other income (loss), net 22 24 70 102 68
Total Other Income (Loss) 39 4 129 183 171
Income (loss) before income tax (provision) benefit 883 1,438 2,086 3,625 5,711
Income tax (provision) benefit (243) (261) (317) (697) (1,000)
Net income (loss) 640 1,177 1,769 2,928 4,711
Net (income) loss attributable to non-controlling interests 42 (324) (958) (637) (1,620)
Net income (loss) attributable to Apollo Global Management, Inc. 682 853 811 2,291 3,091
Preferred stock dividends (22) (25) (24) (22) (73)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $660 $828 $787 $2,269 $3,018
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $1.10 $1.36 $1.30 $3.77 $4.96
Net income (loss) attributable to Common Stockholders - Diluted $1.10 $1.35 $1.29 $3.75 $4.94
Weighted average shares outstanding – Basic 579 587 585 581 587
Weighted average shares outstanding – Diluted 579 590 589 582 590

Via collecting and investing the long-term insurance fees from its insurance business and reinvesting them in its private equity business Apollo should be able to achieve long-term capital appreciation, which will unlock billions of unrealized value for Apollo.

Apollo's intrinsic value is 140 billion USD compared to Apollo's current market capitalization of 95.50 billion USD, in Wolfteam Ltd.'s view.

Carlyle Is Undervalued

Carlyle, the alternative investments company is undervalued on reinvestment of long-term insurance fees, according to Wolfteam Ltd.'s projections and estimates.

According to Carlyle's second quarter 2024 earnings statement Carlyle has 90 billion USD of insurance premiums, so called perpetual capital fee-earning AUM at its disposal which to invest long-term in its main private equity business.

Total Assets Under Management: $435 billion, up 13% year-over-year
• Fee-earning Assets Under Management: $307 billion, up 13% year-over-year
• Perpetual Capital Fee-earning AUM: $90 billion, representing 29% of total Fee-earning AUM
• Pending Fee-earning AUM: $18 billion, up 19% year-over-year
• Available Capital for investment: $83 billion, up 15% year-over-year

Such a long-term cash pile enables Carlyle to achieve superior investment results by investing billions of USD for the long-term, not pressed by the requirements of the capital owners like pension funds, endowments, wealthy individuals.

In addition, Carlyle can thus achieve long-term dividend yields income from its developed private equity firms' investments.

Carlyle's intrinsic worth is 34 billion USD compared to Carlyle's market capitalization of 17.48 billion USD, in Wolfteam Ltd.'s view.

Blackstone Is Undervalued

 

Blackstone Inc., the world's largest alternative assets manager is undervalued on the potential of long-term capital appreciation in the private equity business, from reinvesting the long-term, stable insurance premium fees, according to Wolfteam Ltd.'s projections and estimates.

Wall Street equity research analysts put 0, zero in their models when they evaluate the return on future investments from Blackstone's private equity portfolios. History has shown that on the contrary, Blackstone is able to achieve return on investment from its private equity companies portfolio, as well as from its real assets and credit and insurance business lines.

Furthermore, the long-term fees from Blackstone's insurance business are invested with a longer-term horizon, which could bring further capital appreciation. 

In addition, Blackstone's third quarter 2024 financial results showed marked operational improvement measured on both revenue and net profit. 

Blackstone | 1
BLACKSTONE’S THIRD QUARTER 2024 GAAP RESULTS
▪ GAAP Net Income was $1.6 billion for the quarter and $4.1 billion year-to-date (“YTD”). GAAP Net Income
Attributable to Blackstone Inc. was $781 million for the quarter and $2.1 billion YTD.
Throughout this presentation, all current period amounts are preliminary and unaudited. Totals may not add due to rounding. See pages 36-38, Definitions and
Dividend Policy, for definitions of terms used throughout this presentation. NCI means non-controlling interests.($ in thousands, except per share data) (unaudited) 3Q'23 3Q'24 3Q'23 YTD 3Q'24 YTD 3Q'23 LTM 3Q'24 LTM
Revenues
Management and Advisory Fees, Net 1,655,443$ 1,794,894$ 5,023,128$ 5,309,355$ 6,671,566$ 6,957,487$
Incentive Fees 158,801 191,794 454,754 559,434 665,018 799,851
Performance Allocations 390,486 1,569,673 894,647 3,322,003 841,443 2,959,529
Principal Investments 163,653 93,371 (782) 675,860 38,429 377,311
Interest and Dividend Revenue 109,133 109,774 348,123 312,612 450,755 480,986
Other 63,769 (96,312) 17,951 (31,861) (225,331) (142,741)
Total Revenues 2,541,285$ 3,663,194$ 6,737,821$ 10,147,403$ 8,441,880$ 11,432,423$
Expenses
Compensation and Benefits 946,186 1,440,344 2,769,892 3,954,850 3,429,221 4,497,928
General, Administrative and Other 279,186 340,945 827,614 1,022,823 1,119,954 1,312,514
Interest Expense 110,599 111,337 323,136 328,156 423,465 436,888
Fund Expenses 38,934 3,470 118,918 13,380 137,449 13,449
Total Expenses 1,374,905$ 1,896,096$ 4,039,560$ 5,319,209$ 5,110,089$ 6,260,779$
Other Income (Loss) (49,078)$ 42,842$ 104,373$ 70,009$ 73,038$ (118,361)$
Income Before Provision for Taxes 1,117,302$ 1,809,940$ 2,802,634$ 4,898,203$ 3,404,829$ 5,053,283$
Provision for Taxes 196,560 245,303 467,504 789,220 326,358 835,177
Net Income 920,742$ 1,564,637$ 2,335,130$ 4,108,983$ 3,078,471$ 4,218,106$
Redeemable NCI in Consolidated Entities (92,577) (22,184) (81,589) (61,595) (281,179) (225,524)
Non-Redeemable NCI in Consolidated Entities 461,325 805,986 1,177,639 2,097,943 1,562,716 2,219,195
Net Income Attributable to Blackstone Inc. (''BX'') 551,994$ 780,835$ 1,239,080$ 2,072,635$ 1,796,934$ 2,224,435$
Net Income Per Share of Common Stock, Basic 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91$
Net Income Per Share of Common Stock, Diluted 0.73$ 1.02$ 1.64$ 2.71$ 2.39$ 2.91

Blackstone Inc.'s intrinsic value is 250 billion USD compared to Blackstone's market capitalization of 205.40 billion USD.

KKR Is Undervalued On Insurance Long-Term Fees

 

KKR is undervalued, according to Wolfteam Ltd.'s projections and estimates.

A large reason for the undervaluation of KKR is the huge sum of insurance fees it gets from its annuities business. These insurance fees are plowed into the private equity, real estate, credit and liquid strategies business lines of KKR. Since the insurance fees KKR gets from its insurance division are long-term in nature KKR has the ability to invest the insurance fees in its mainly private equity, real estate, credit and liquid strategies business lines of KKR for the long-term.

Assets Under Management
• AUM of $624 billion, up 18% year-over-year, with $24 billion of organic new capital raised in the quarter and $118 billion in the
LTM
• Fee Paying AUM of $506 billion, up 19% year-over-year, with $25 billion of organic new capital raised in the quarter and $122
billion in the LTM
• Perpetual Capital of $259 billion, up 27% year-over-year driven primarily by the organic growth of Global Atlantic. Perpetual
capital represents 42% of AUM and 50% of FPAUM

The long-term insurance fees of KKR are 259 billion USD  or 50 % of the Fee Paying Assets Under Management.

Wall Street equity research analysts, when they model and forecast KKR and other private equity giants' businesses, they put 0, zero as the return on investment of these private equity giants. That is, Wall Street analysts think KKR, Blackstone, Carlyle, Apollo can not earn a return on their mainly private equity investments. History shows, that such an assumption is difficult to substantiate.

In view of the aforementioned, KKR holds tremendous unlocked value. KKR's intrinsic value is 180 billion USD, according to Wolfteam Ltd.'s calculations and estimates.