The US Stock Market Is Discounting Federal Reserve Raising Rates

 

The US stock market nears correction territory or 10 % lower than the Standard and Poor's 500, DJIA and Nasdaq Composite most recent peaks.

The most likely reason for the fall is that due to the US presidential administration tariff effects leading to higher prices will force the Federal Reserve to raise the Federal Funds Rate and thus interest rate levels, again, according to Wolfteam Ltd.'s projections and estimates.

The higher rates will affect the US economy, corporate deal activity and thus bring about an economic slowdown. Hence the fall of the US major stock market indices.

Blue Owl And Carlyle Are Global Leaders In Private Credit

 

Both Blue Owl and Carlyle manage circa tens of billions USDs in private credit which makes them global leaders in private credit. Private credit is in a boom phase driven by light touch regulation and institutional capital inflow.

Blue Owl's market capitalization is 30 billion USDs, while Carlyle's market capitalization is 16.16 billion USD.

Blue Owl pays 3.58 % dividend yield, while Carlyle pas 3.10 % dividend yield. These are hefty dividends when compared to the average dividends on the Standard and Poor's 500 Index and generally available on the US and global stock markets.

Blue Owl and Carlyle are cash cows due to the nature of their business, especially the private credit and the private equity part, making significant profits and furnishing investors with large dividends.

Both Blue Owl and Carlyle are undervalued, according to Wolfteam Ltd.'s projections and estimates.

Blue Owl's intrinsic worth is 47 billion USD, while Carlyle's intrinsic worth is 32 billion USDs, according to Wolfteam Ltd.'s projections and estimates.

Both Blue Owl and Carlyle are very active in the booming private credit and private equity businesses achieving returns from those businesses often more than the average Standard and Poor's 500 return.

Due to their strategic positioning in private credit Blue Owl and Carlyle will continue to reap outsized profits and benefit handsomely their shareholders, in Wolfteam Ltd.'s view.

 

Blue Owl Valuation

 

Blue Owl Capital or Blue Owl, the global alternative asset management firm is undervalue, according to Wolfteam Ltd.'s projections and estimates.

Excerpts from Blue Owl fourth quarter 2025 earnings deck: 

Blue Owl' AUM of $251.1 billion, up 52% since December 31, 2023
◦ FPAUM of $159.8 billion, up 56% since December 31, 2023
◦ Permanent Capital of $191.5 billion, up 47% since December 31, 2023
◦ AUM Not Yet Paying Fees of $22.6 billion, reflecting expected annual management fees
of over $300 million once deployed
• New Capital Commitments Raised of $18.1 billion ($9.5 billion new equity capital) in the quarter
• FPAUM Raised and Deployed of $9.2 billion in the quarter 

Blue Owl's intrinsic value is 47 billion USD compared with Blue Owl's current market capitalization of 32.16 billion USD, according to Wolfteam Ltd.'s projections and estimates.

Blue Owl distributes a comparatively large to other global private equity firms 3.34 % dividend yield, which speaks even more that Blue Owl is undervalued.

Permanent Capital or capital from Blue Owl's insurance business is 191.5 billion USD or almost 80 % of the total assets under management of 251.1 billion of USD of Blue Owl Capital. Such 191.5 billion USDs stable fees earning assets under management help long-term investing and ultimately investing success by Blue Owl Capital.

Here is Blue Owl's fourth quarter 2024 earnings statement:

9
Non-GAAP Results (Unaudited)
For information on and reconciliation of the Company's non-GAAP measures, please see slides 24 to 27.
Quarter Ended Year Ended
(dollars in thousands, except per share data) 4Q'24 4Q'23 % Change 4Q'24 4Q'23 % Change
FRE Revenues
Credit (including Part I Fees of $135,503, $110,073, $518,981 and
$381,576) $ 350,273 $ 249,285 41% $ 1,234,594 $ 899,902 37%
GP Strategic Capital (including Part I Fees of $2,077, $1,850, $8,878
and $5,770) 163,446 138,974 18% 615,274 545,832 13%
Real Assets 54,501 32,979 65% 187,749 122,365 53%
FRE Management Fees, Net 568,220 421,238 35% 2,037,617 1,568,099 30%
FRE Administrative, Transaction and Other Fees 23,288 46,295 (50%) 126,259 91,084 39%
FRE Performance Revenues 4,174 1,276 227% 6,687 1,276 424%
FRE Revenues 595,682 468,809 27% 2,170,563 1,660,459 31%
FRE Expenses
FRE Compensation and Benefits 162,093 131,854 23% 620,877 467,272 33%
FRE General, Administrative and Other Expenses 83,016 51,996 60% 260,248 184,780 41%
FRE Expenses 245,109 183,850 33% 881,125 652,052 35%
Fee-Related Earnings 340,331 279,392 22% 1,253,366 997,717 26%
Distributable Earnings 315,177 262,285 20% 1,129,248 927,838 22%
Adjusted Per Share Information
Fee-Related Earnings per Adjusted Share $ 0.23 $ 0.20 $ 0.86 $ 0.70
Distributable Earnings per Adjusted Share $ 0.21 $ 0.18 $ 0.77 $ 0.65
Supplemental Information
Credit $ 373,104 $ 295,372 26% $ 1,355,238 $ 986,744 37%
GP Strategic Capital 165,375 140,388 18% 622,427 551,076 13%
Real Assets 57,203 33,049 73% 192,898 122,639 57%
FRE Revenues 595,682 468,809 27% 2,170,563 1,660,459 31%
FRE Margin 59 % 61 % 59 % 61 %
FRE Management Fees as % from Permanent Capital 90% 92% 91% 92%