Tariffs Effect On Blackstone

 

Since 'Liberation Day', the 2nd of April when President Trump announced sweeping tariffs increase Blackstone Inc.'s stocks is down circa 16 %.

The market is assuming the probability of a recession is higher now, which if turns out to be true will hurt the capital intensive, profit making companies in Blackstone's private equity portfolio, its real estate investment portfolio and its private credit loans disbursed to medium sized companies at high interest rates, which will be hurt during a recession, according to Wolfteam Ltd.'s projections and estimates.

It is true that initially Blackstone's private equity, real estate and private credit business will be hurt if there is an economic slowdown. But the Federal Reserve already announced that it is decreasing the pace of its balance sheet run off and it is also highly likely that the Federal Reserve will step in and decrease the Federal Funds rate more than the two times in 2025 currently forecast by Wall Street economists.

It is true that Wall Street economists have swiftly raised the estimates of Federal Reserve interest rate cuts to three and even four in 2025 in the wake of higher than expected tariffs, the stock market's large fall and the dramatic decrease of 10 year US Treasury yields to below 4 %.  

The probable lower interest rates and more money in circulation will support Blackstone's current private equity portfolio as the companies therein will be valued using lower discount rates and will be consequently valued higher than in a higher interest rate environment. Lower interest rates will also improve Blackstone's private credit and real estate portfolio as loans will be disbursed at lower rates and real estate will be valued higher with lower discount rates, according to Wolfteam Ltd.'s projections and estimates.

In short, after a probable fall of 30 % or even more Blackstone's market capitalization could recover and even surpass markedly previous levels in Wolfteam Ltd.'s view. 

A risk for the above forecast is if the Magnificent 7 Apple, Microsoft, Alphabet, Amazon, Meta, NVIDIA and Tesla technology stocks fall more than 40 % from their recent peaks. This will drag down the value of technology along the curve. Blackstone's investment portfolio is heavily exposed to technology and technology public stocks and private technology firms' value disruption, which could be defined as a fall by more than 40 % could temporarily bring Blackstone's portfolio in disarray.

The Tariffs Effect On Private Equity Giants

 

The announcement of higher than expected tariffs on US imported goods sank US and global stock markets.

The stocks of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC etc. and other leading alternative investment - private equity, private credit, real estate, infrastructure investment management firms fell by more than the market and even by more than JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, Wells Fargo and other leading banks' stocks.

The explanation offered by Wall Street analysts is that due to a possible tariffs invoked recession  Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC's portfolio companies will be hurt and thus Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC's private equity investment portfolios will sour and bring down the respective firms' value.

In addition, the real estate and private credits investment management lines of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC will suffer as a global recession will invoke a fall in real estate prices and medium sized firms will face difficulty paying off the 8 % + loans they have been disbursed by the private credit investment management lines of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  etc., further eroding the value of Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms.

The effect on Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms will not be as bad as Wall Street traders currently and Wall Street equity research analysts forecast for the future in their Microsoft Excel models, according to Wolfteam Ltd.'s projections and estimates.

The Federal Reserve will be quick to lower the Federal Funds rate and thus the interest rate levels in the US and by extension the global economy by 3 or 4 times in 2025 and thus stave off a coming recession or make it shallower. Lower interest rates will again beget deal activity by Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms, because they will able to fund acquisitions more cheaply. All this velocity of money will feed into the economy and help the US and global economy avoid or experience a shallower recession. Lower interest rates will support Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms' real estate and private credit businesses as the leading private equity firms will be able to disburse loans more cheaply and firms will naturally be able to repay them more successfully.

In short, Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC  and other leading private equity firms' stocks could fall by 30 % or slightly more where they will prove undervalued, in Wolfteam Ltd.'s view.  Afterwords Blackstone, KKR, Apollo, Carlyle, Ares, Blue Owl, CVC's stocks could surpass easily the previous peaks.

The Tariffs Effect On The Stock Market

 

Contrary to what we are seeing now, the new, higher, US tariffs on imported goods will have temporary, be it a profound effect on the US and global stock markets.

US stock market could enter a bear market with a fall of more than 20 % or my even fall by 30 % measured by the main indices, but US stock market will recover in 5 to 7 months, according to Wolfteam Ltd.'s projections and estimates.

Most probably the Federal Reserve will react relatively swiftly and lower the Federal Funds Rate 3 or 4 times in 2025 and thus lower the interest rate levels in the US and global economy.

In addition, after the initial scare investors will understand that the tariffs are not that frightening or dangerous for financial markets, in Wolfteam Ltd.'s view.

Investors will go back in the market once they realize that the situation is not as bad as everybody seems to be assuming now. The adaptation to tariffs will be gradual and the effect on US based company's earnings will not be as high as most Wall Street equity research analysts are forecasting now. Wall Street equity research analysts earlier estimated a 15 % earnings growth for 2025, now most of them are estimating a 5 % earnings growth or no earnings growth of US based publicly listed companies.

US companies' earnings will grow by circa 7 % in 2025, according to Wolfteam Ltd.'s projections and estimates.

 

 

AI Stocks Should Recover in 1 Year

 

AI stocks experienced a 30 % on average fall in price since the beginning of 2025.

AI stocks will recover in 1 year's time, according to Wolfteam Ltd.'s projections and estimates.

Artificial intelligence, AI is simply too strong a transformational force to be ignored.

Mid-term, we could end in a bubble, of course and experience the boom and bust associated with every new technology that changes everything.

However, in the long-term some AI giants will survive akin to Amazon and Google in the previous Dot Com boom and bust.

CVC Is Undervalued. Intrinsic Valuation

 

CVC Capital Partners, the globally leading alternative investment management firm is undervalued on the boom in private equity and private credit, according to Wolfteam Ltd.'s projections and estimates.

With total assets under management of 200 billion EURs and Fee Paying Assets Under Management, FPAUM of 147 billion EURs, which grew 50 % in 2024 CVC is poised to benefit from the ongoing boom in private markets.

With 79 billion EURs in FPAUM in private equity, private equity remains the largest focus of CVC. Private equity is the largest private markets asses subclass and CVC is a global leader in private equity. 

CVC continues to fund raise strongly by raising 16 billion EURs in 2024.

CVC is growing its private wealth and insurance business portfolio by investing 170 + insurance clients.  

CVC expanded its EBITDA and MFE margins in 2024 compared to 2023.

 CVC's market capitalization is 19.68 billion EURs. 

CVC's intrinsic value is 27 billion EURs, according to Wolfteam Ltd.'s projections and estimates.

 

Here are CVC's annual 2024 report highlights:

 

CVC 2024 Full-Year Results
Strong growth and recovery in investment activity
CVC Capital Partners plc announces results for the financial year ended 31 December 2024.
Financial highlights1:
– Strong financial performance:
• Fee-paying Assets under Management (FPAUM) of €147.3bn as at 31 December 2024,
+50% vs. FY 2023. Assets under Management (AUM) of €200bn.
• Management fees of €1,328m, +23% vs. FY 2023.
• Management fee earnings (MFE) of €780m, +40% vs. FY 2023.
• MFE margin of 59%.
• Performance related earnings (PRE) of €182m, +5% vs. FY 2023.
• EBITDA of €966m, +31% vs. FY 2023.
• Profit after tax of €830m, +36% vs. FY 2023.
• Recommended half-year dividend of €0.21 per share (€225m in total) to be paid on 18
June 2025 to shareholders registered on 23 May 2025, subject to shareholder approval.
Key business updates:
– Total AUM reached €200bn.
– FPAUM increased to €147bn or +50% vs. FY 2023, driven by the activation of Europe / Americas
Fund IX and Asia VI, continued growth across Credit and Secondaries, and the inclusion of
Infrastructure.
– Strong recovery in deployment activity: €25.6bn or +71% vs. FY 2023, primarily driven by a
significant increase in Private Equity investing together with record levels of deployment across
Credit and Secondaries. The CVC Network continues to be critical in generating attractive
investment opportunities across all asset classes, while maintaining our highly disciplined
investment approach.
– Realisations more than doubled year-on-year to €13.1bn or +114%, as we selectively harvest our
existing portfolio and return cash to our clients, and we continue to generate very strong realised
returns2 of 4.0x Gross Multiple of Money (MOIC) and 30% Gross Internal Rate of Return (IRR) in
2024. Based on current market conditions, we anticipate realisations in 2025 at, or slightly above,
2024 levels.
1 References throughout this document to Revenue, EBITDA, Profit after tax, Management fees, Operating expenses,
Management fee earnings and Performance fee earnings are equivalent to the pro forma and adjusted pro forma measures
presented in the Group's 2024 Annual Report & Accounts. Pro forma financial information reflects the results of the Group as if
the Pre-IPO Reorganisation and the acquisition of CVC DIF had been completed on 1 January 2023. Adjusted measures
illustrate the underlying operating performance of the Group and exclude non-recurring items (including but not limited to: IPO
and acquisitions expenses, items related to fund NCI, amortisation of acquired intangible assets, change in value of the forward
liability related to CVC Secondary Partners and CVC DIF acquisitions). Key statutory metrics for the year are: Total revenue of
€1,566m, EBITDA of €474m and Profit after tax of €308m.
2 Weighted average by invested capital, for Private Equity (Europe / Americas, Asia, StratOps, Growth) signed realisations in
the period. Gross MOIC denotes gross multiple of invested capital; IRR denotes internal rate of return.
2
– Our investment portfolios continue to be resilient across all strategies, with EBITDA growth of
c.10% across our Private Equity portfolio, consistent value creation of +12% across our combined
Private Equity and Infrastructure portfolios, and all material CVC funds3 remain on or above plan.
– We expect further strong growth in MFE in 2025 underpinned by our ongoing fundraising, and the
full year impact of funds activated in 2024. We currently expect PRE in 2025 to show material
growth vs. 2024, and whilst we expect 2025 PRE to remain well below the medium-term range,
the overall carry potential from key funds remains unchanged.
– As a firm, we have made significant progress towards embedding AI-driven solutions to optimise
knowledge sharing, further improve our investment origination and investment selection, and
enhance operational productivity. In addition, we are focussed on rolling out AI across our
investment portfolio, including product R&D, software engineering and augmenting customer
service.
– We continue to successfully execute on our fundraising targets with c.€16bn4 of capital raised in
2024 and we are achieving significant progress on our current fundraises.
– We are accelerating growth in Private Wealth and Insurance with the launch of our first two
evergreen products: CVC-CRED and CVC-PE. We raised c.€1.5bn from the wealth channel in
2024 – more than double 2023 – and we are excited by our ability to achieve significant future
growth. In addition, we have raised over €15bn of capital from insurance clients over the past five
years, and we see a significant opportunity for growth as we further increase our focus on this
channel.
Rob Lucas, CEO, said: “2024 was a landmark year for CVC, in which we successfully completed our
IPO, delivered continued growth and made significant strategic progress. Our strong performance has
been driven by the unique CVC Network, our deep and longstanding client relationships, and the
quality of the team we have built.
Whilst the economic and geopolitical environment remains uncertain, our experience shows that
these conditions can provide some of our most attractive investment opportunities. Following our
recent fundraising success, we have over €40bn of capital available to invest prudently across our
seven strategies, and we are excited about our opportunities for future growth.”
The 2024 Annual Report and Accounts for CVC Capital Partners plc in the European single electronic
reporting format and also in PDF format can be found here:
https://www.cvc.com/shareholders/reports-and-presentations/
Presentation and Q&A:
Management will hold a webcast to present the results and answer questions from analysts and
investors at 09:00 GMT / 10:00 CET on Thursday, 20 March 2025.
Participants can register at this link: https://reg.lumiengage.com/cvc-capital-partners-plc-full-year-
results-presentation/cvcfy24analyst/Site/Register
Annual General Meeting (AGM):
The first AGM of CVC Capital Partners plc will be held at the Radisson Blu Waterfront Hotel, Rue De
L’Etau, St. Helier, Jersey JE2 3WF, on Tuesday, 20 May 2025 at 09:00 BST. The notice of meeting
has been published, and can be found here: https://www.cvc.com/shareholders/shareholder-
information/agm/
3 List of material funds and definition of “on plan” and “above plan” as per the Group’s 2024 Full-Year Results Presentation.
4 Total capital commitments made across CVC’s seven strategies (including Infrastructure) from 1 January 2024 through 31
December 2024, including commitments accepted to CVC’s private funds, separate accounts, and evergreen products.
Amounts shown may include GP commitments and, in respect of private credit strategies, leverage.
 

Here is CVC's income statement from the annual 2024 report:

 

€m)
FY 2022 FY 20232 FY 20242 FY 2023-24
Growth
Management fees 888 1,080 1,328 23%
(+) Performance fee earnings 144 174 182 5%
(+) Other operating income 3 3 3 (4%)
Revenue 1,036 1,257 1,513 20%
(-) Personnel expenses (279) (369) (399) 8%
(-) Other expenses (128) (153) (148) (3%)
EBITDA 628 734 966 31%
(-) D&A (27) (37) (39) 8%
(-) Net finance charges (22) (18) (27) 50%
(-) Tax (20) (71) (70) (1%)
Profit after tax 560 609 830 36%
of which attributable to CVC DIF non-controlling interests 303
Select KPIs:
Management fee earnings (MFE) 481 557 780 40%
Management fees (% of revenue) 86% 86% 88%
MFE margin 54% 52% 59%
EBITDA margin 61% 58% 64%

 

NVIDIA Valuation. On AI Slowdown. Scenarios

 

NVIDIA is undervalued, even in the current artificial intelligence slowdown.

NVIDIA's intrinsic value is 3.7 trillion USD, according to Wolfteam Ltd.'s projections and estimates.

NVDIA's current market capitalization is 2.68 trillion USDs. 

In a negative scenario with a further AI slowdown, NVIDIA's intrinsic value could fall down to 1.7 trillion USDs.

In a very positive scenario where AI will continue developing at a lightning speed, NVIDIA could end up with 7.2 trillion USDs intrinsic value.

For the moment, though, NVIDIA is worth 3.7 trillion USDs, in Wolfteam Ltd.'s view.

Blackstone's Investment Portfolio Is Geared Towards Technology!

 

Blackstone Inc, the global alternative investments company has 1.127 trillion USDs under management.

In all its three main segments private equity, private credit and real estate a large part of Blackstone's investment portfolio is in investments connected directly or indirectly to technology, according to Wolfteam Ltd.'s analysis. Even on its main internet landing page Blackstone is boasting it is 'building the infrastructure of the future by investing in data centers and the energy that powers them, Blackstone is providing the infrastructure to fuel the AI revolution'.

Large part of Blackstone's real estate portfolio holds data centers related real estate properties connected to AI, artificial intelligence and industrial properties such as warehouses, which are connected to the online trade.

The private equity business of Blackstone is tilted towards technology by buying out outright technology businesses or adjacent to technology businesses as indirect play on technology. Examples of businesses Blackstone has bought for the funds that it manages that are adjacent to technology are energy producing businesses as energy is vital for the functioning of the artificial intelligence, AI data centers which are the bedrock of the current fourth industrial artificial intelligence, AI revolution.

Via its private credit investment vehicles Blackstone gives out many loans to mainly mid-sized and even smaller technology firms, thus again supporting the current artificial intelligence, AI boom

Blackstone investments' focus on technology is one of the main reason Blackstone's private equity business' returns have been able to beat the average S&P 500's returns in the last 10 years, according to unofficial data.

Blackstone's artificial intelligence, AI related technology investments, which are large part of its overall fee earning 830.7 billion USDs portfolio is one of the main reasons Blackstone sports market capitalization of 176.10 billion USDs.

Blackstone's strong investments in data centers and online trade warehousing will ensure that Blackstone can unlock tens of billions of USDs of additional value in the near future, according to Wolfteam Ltd.'s projections and estimates.

Below are Blackstone's fourth quarter, full year 2024 earnings, growing strongly on the back of technolgy investments:

$ in thousands, except per share data) (unaudited) 4Q'23 4Q'24 FY'23 FY'24
Revenues
Management and Advisory Fees, Net 1,648,132$ 1,879,581$ 6,671,260$ 7,188,936$
Incentive Fees 240,417 404,744 695,171 964,178
Performance Allocations (362,474) 507,150 532,173 3,829,153
Principal Investments (298,549) 36,989 (299,331) 712,849
Interest and Dividend Revenue 168,374 98,547 516,497 411,159
Other (110,880) 155,554 (92,929) 123,693
Total Revenues 1,285,020$ 3,082,565$ 8,022,841$ 13,229,968$
Expenses
Compensation and Benefits 543,078 1,039,203 3,312,970 4,994,053
General, Administrative and Other 289,691 339,086 1,117,305 1,361,909
Interest Expense 108,732 115,532 431,868 443,688
Fund Expenses 69 6,296 118,987 19,676
Total Expenses 941,570$ 1,500,117$ 4,981,130$ 6,819,326$
Other Income (Loss) (188,370)$ (21,171)$ (83,997)$ 48,838$
Income Before Provision for Taxes 155,080$ 1,561,277$ 2,957,714$ 6,459,480$
Provision for Taxes 45,957 232,451 513,461 1,021,671
Net Income 109,123$ 1,328,826$ 2,444,253$ 5,437,809$
Redeemable NCI in Consolidated Entities (163,929) 306 (245,518) (61,289)
Non-Redeemable NCI in Consolidated Entities 121,252 624,647 1,298,891 2,722,590
Net Income Attributable to Blackstone Inc. (''BX'') 151,800$ 703,873$ 1,390,880$ 2,776,508$
Net Income Per Share of Common Stock, Basic 0.20$ 0.92$ 1.84$ 3.62$
Net Income Per Share of Common Stock, Diluted 0.20$ 0.92$ 1.84$ 3.62

 

 Here is more on Blackstone's capital metrics: 

Blackstone 

CAPITAL METRICS – ADDITIONAL DETAIL
Corporate Private Equity also includes Life Sciences, Growth, BTAS, and BXPE. AUM and related capital metrics are reported in the segment where the assets are
managed.($ in millions) 4Q'24 FY'24 4Q'24 FY'24 4Q'24 FY'24
Real Estate 8,094$ 27,941$ 7,015$ 25,280$ 5,457$ 22,164$
Opportunistic 1,491 5,030 4,676 13,799 1,026 3,836
Core+ 2,962 11,555 686 3,705 2,254 10,152
Debt Strategies 3,642 11,356 1,653 7,777 2,177 8,177
Private Equity 11,617 41,285 12,133 42,191 10,566 28,931
Corporate Private Equity 5,909 19,529 3,845 19,514 6,376 15,565
Tactical Opportunities 1,117 4,820 1,079 5,998 963 3,605
Secondaries 1,774 6,693 4,328 11,380 2,587 7,939
Infrastructure 2,818 10,243 2,880 5,299 640 1,821
Credit & Insurance 34,181 91,200 21,633 63,783 8,698 33,319
Multi-Asset Investing 3,607 11,032 793 2,609 1,179 2,729
Total Blackstone 57,500$ 171,459$ 41,574$ 133,863$ 25,900$ 87,142

ASSETS UNDER MANAGEMENT
Total AUM
($ in billions)
Fee-Earning AUM
($ in billions)
Perpetual Capital AUM
($ in billions)
Private EquityReal Estate Credit & Insurance Multi-Asset Investing
▪ Total AUM increased to $1,127.2 billion, up 8% year-over-year, with $57.5 billion of inflows in the quarter
and $171.5 billion for the year.
▪ Fee-Earning AUM of $830.7 billion was up 9% year-over-year, with $39.2 billion of inflows in the quarter
and $155.4 billion for the year.
▪ Perpetual Capital AUM reached $444.8 billion, up 12% year-over-year.
– Fee-Earning Perpetual Capital AUM increased to $380.1 billion, representing 46% of Fee-Earning AUM.

PRIVATE EQUITY
▪ Total AUM: Increased 12% to $352.2 billion with inflows of $11.6 billion in the quarter and $41.3 billion for the year.
– Inflows in the quarter included $2.8 billion in Infrastructure, $1.9 billion in Life Sciences, $1.8 billion in
Secondaries, $1.1 billion in Tactical Opportunities, and $931 million for our energy transition fund.
– $1.3 billion of capital raised in BXPE, including amounts allocated to other strategies.
– On January 2, launched Blackstone Infrastructure Strategies (“BXINFRA”), a continuously offered infrastructure
strategy which raised over $1.0 billion.
▪ Capital Deployed: $12.1 billion in the quarter, including AirTrunk, Adevinta, and Sediver, and $42.2 billion for the
year; committed an additional $9.9 billion in the quarter, including Jersey Mike’s and Inhabit.
▪ Realizations: $10.6 billion in the quarter, including Alinamin, Cliff Swallow, and International Gemological Institute,
and $28.9 billion for the year.
▪ Fee Related Performance Revenues: $1.2 billion in the quarter driven by the three-year crystallization in
Infrastructure and the first significant crystallization in BXPE.% Change % Change
($ in thousands) 4Q'23 4Q'24 vs. 4Q'23 FY'23 FY'24 vs. FY'23
Management and Advisory Fees, Net 500,303$ 629,402$ 26% 2,007,592$ 2,198,280$ 9%
Fee Related Performance Revenues - 1,170,857 n/m - 1,185,428 n/m
Fee Related Compensation (137,082) (674,551) 392% (619,678) (1,164,237) 88%
Other Operating Expenses (90,309) (117,178) 30% (329,221) (391,309) 19%
Fee Related Earnings 272,912$ 1,008,530$ 270% 1,058,693$ 1,828,162$ 73%
Realized Performance Revenues 322,701 344,133 7% 1,343,865 1,392,447 4%
Realized Performance Compensation (146,184) (138,449) (5)% (584,154) (633,491) 8%
Realized Principal Investment Income 7,662 15,174 98% 76,220 52,356 (31)%
Net Realizations 184,179 220,858 20% 835,931 811,312 (3)%
Segment Distributable Earnings 457,091$ 1,229,388$ 169% 1,894,624$ 2,639,474$ 39%
Segment Revenues 830,666$ 2,159,566$ 160% 3,427,677$ 4,828,511$ 41%
Total AUM 314,391,397$ 352,168,635$ 12% 314,391,397$ 352,168,635$ 12%
Fee-Earning AUM 176,997,265$ 212,182,896$ 20% 176,997,265$ 212,182,896$ 20

Blackstone Investments In Private Credit Hold A Lot Of Value

 

Blackstone Inc has 375.5 billion USDs invested in Credit & Insurance out of its 1.127 trillion USDs of assets under management.

Private credit is a hot sector in alternative investments. Blackstone does both direct lending and securitized lending via CLOs. In 2024 Blackstone raised 91.2 billion USDs for its Credit & Insurance business.

Due to its market share and share in technology related private credit lending and securitized credit, Blacktone stands to unlock huge value in the future, according to Wolfteam Ltd.'s projections and estimates.

Here are highlights of Blackstone's Credit & Insurance business from Blackstone's fourth quarter, full calendar year 2024 earnings:

 Total AUM: Increased 20% to $375.5 billion with inflows of $34.2 billion in the quarter and $91.2 billion for the year.
– Inflows in the quarter included $14.5 billion for the global direct lending strategy, inclusive of $3.1 billion of
equity raised for BCRED, and $9.9 billion for infrastructure and asset based credit strategies.
– The fifth opportunistic private credit strategy had $1.2 billion of inflows in the quarter, bringing total investable
capital to $4.2 billion.
– Closed 5 new U.S. CLOs for $2.5 billion.
▪ Capital Deployed: $21.6 billion in the quarter and $63.8 billion for the year driven by U.S. direct lending as well as
infrastructure and asset based credit strategies.
– Committed an additional $7.2 billion that was not yet deployed in the quarter.
▪ Realizations: $8.7 billion in the quarter and $33.3 billion for the year.
▪ Returns: Private Credit gross return of 3.1% (2.2% net) and Liquid Credit gross return of 2.4% (2.3% net) in the
quarter.
– Private Credit gross return of 15.7% (11.6% net) and Liquid Credit gross return of 9.5% (9.0% net) for the year.

($ in thousands) 4Q'23 4Q'24 vs. 4Q'23 FY'23 FY'24 vs. FY'23
Management Fees, Net 339,829$ 403,743$ 19% 1,338,041$ 1,581,807$ 18%
Fee Related Performance Revenues 154,642 227,986 47% 564,287 747,092 32%
Fee Related Compensation (156,819) (222,962) 42% (628,064) (755,620) 20%
Other Operating Expenses (94,538) (100,674) 6% (323,773) (371,354) 15%
Fee Related Earnings 243,114$ 308,093$ 27% 950,491$ 1,201,925$ 26%
Realized Performance Revenues 135,746 163,799 21% 317,620 313,092 (1)%
Realized Performance Compensation (60,694) (70,266) 16% (140,210) (129,814) (7)%
Realized Principal Investment Income 5,999 8,544 42% 21,752 39,855 83%
Net Realizations 81,051 102,077 26% 199,162 223,133 12%
Segment Distributable Earnings 324,165$ 410,170$ 27% 1,149,653$ 1,425,058$ 24%
Segment Revenues 636,216$ 804,072$ 26% 2,241,700$ 2,681,846$ 20%
Total AUM 312,674,037$ 375,507,818$ 20% 312,674,037$ 375,507,818$ 20%
Fee-Earning AUM 218,188,936$ 264,617,560$ 21% 218,188,936$ 264,617,560$ 21% 

Private credit relates to giving loans to business at 9 % + interest, usually to the tune of 9 % -12 % interest on disburse loans. It is natural that such businesses do not have access to bank funding, because they are either in distress or in difficult position. Large alternative asset management companies like Blackstone, KKR, Apollo, Carlyle, Ares, Blu Owl etc, have stepped in and filled this void left by banks.

Actually, private credit turns out to be a hugely profitable business and has minted several billionaires on Wall Street for the past 10 - 12 years since deregulation opened up this niche to alternative asset management operators.

Private credit related publicly listed vehicles of Blackstone, Blue Owl yield 9 % to 12 % dividends, which proves how lucrative the private credit business is.

Much of Blackstone's private credit is in the forms of leveraged loans, direct lending and securitized lending in the form of Collaterilized Debt Obligations, CLOs is given out to mid-sized technology firms. Since the technology sector has lived through exuberant growth in the last last 15 years, private credit to technology firms has proven a hugely profitable niche.

All in all, Blackstone stands further to benefit from the private credit boom that is developing all over the world.

Blackstone Real Estate Investments Hold A Lot Of Unlocked Value. A Play On Technology, AI

 

Blackstone Inc. has 315.4 billion USDs of its 1.127 billion trillion USDs under management invested in real estate.

Real estate is one of the main value drivers for Blackstone, according to Wolfteam Ltd.'s projections and estimate. Blackstone has a similar structure to other alternative investment management firms with private equity the leading profit engine for the largest private equity, real estate and private credit management firms like KKR, Apollo, Carlyle, Ares, Blue Owl etc.

Naturally, it follows that Blackstone's real estate investments hold a lot of unlocked value for the firm. Large part of Blackstone's real estate investments are in artificial intelligence related infrastructure like data centers, delivery centers, logistics property centers etc. So Blackstone's real estate investments business is in its own way a technology play on artificial intelligence, AI.

What is more, Blackstone's real estate investment business has huge scale already, which enables Blackstone to earn excess returns from real estate, even above the Standard and Poor's 500 annual average return. Blackstone's so called perpetual capital is 444.8 billion USD. The perpetual capital are insurance premium fees gathered from Blackstone's proprietary insurance business lines. Due to their nature such insurance premiums are available for long-term investing, often for more than 10 years.

Large part of this perpetual capital flows into Blackstone's real estate investments business, which helps Blackstone achieve superior return from real estate investing.

All said, Blackstone's real estate business is a real growth drive for Blackstone, also in the future and holds tens of billions of USDs of unlocked value, in Wolfteam Ltd.'s view. 

Blackstone Is Undervalued On Private Equity Investments

 

Blackstone Inc., the global alternative investment firm has the largest private equity portfolio in the world with total assets under management of 1 127.2 billion USDs of which 352.2 billion is invested in private equity. 

Which makes Blackstone the largest private equity operator in the world. 444.8 billion USDs of the 1.127 trillion USDs Blackstone manages are in so called perpetual capital. That is it stems from stable insurance fee premiums coming from Blackstone's proprietary owned insurance business lines. These 444.8 billion USD of perpetual capital make for fertile environment of investing into private equity for the long-term 7-10 + years, which enables Blackstone to earn additional, on top investment returns on the standard private equity asset class and thus beat its competitors.

With its huge perpetual capital and private equity's excellent returns Blackstone is poised to unlock tens of billion of USDs of more value.

For the last 20 years private equity returns have often beaten the S&P 500 return.

Blackstone is poised to benefit handsomely from the current driven by regulation and reach for yield private markets boom, according to Wolfteam Ltd.'s projections and estimates.

Here i Blackstone's fourth quarter, calendar year 2024 earnings statement:

($ in thousands, except per share data) (unaudited) 4Q'23 4Q'24 FY'23 FY'24
Revenues
Management and Advisory Fees, Net 1,648,132$ 1,879,581$ 6,671,260$ 7,188,936$
Incentive Fees 240,417 404,744 695,171 964,178
Performance Allocations (362,474) 507,150 532,173 3,829,153
Principal Investments (298,549) 36,989 (299,331) 712,849
Interest and Dividend Revenue 168,374 98,547 516,497 411,159
Other (110,880) 155,554 (92,929) 123,693
Total Revenues 1,285,020$ 3,082,565$ 8,022,841$ 13,229,968$
Expenses
Compensation and Benefits 543,078 1,039,203 3,312,970 4,994,053
General, Administrative and Other 289,691 339,086 1,117,305 1,361,909
Interest Expense 108,732 115,532 431,868 443,688
Fund Expenses 69 6,296 118,987 19,676
Total Expenses 941,570$ 1,500,117$ 4,981,130$ 6,819,326$
Other Income (Loss) (188,370)$ (21,171)$ (83,997)$ 48,838$
Income Before Provision for Taxes 155,080$ 1,561,277$ 2,957,714$ 6,459,480$
Provision for Taxes 45,957 232,451 513,461 1,021,671
Net Income 109,123$ 1,328,826$ 2,444,253$ 5,437,809$
Redeemable NCI in Consolidated Entities (163,929) 306 (245,518) (61,289)
Non-Redeemable NCI in Consolidated Entities 121,252 624,647 1,298,891 2,722,590
Net Income Attributable to Blackstone Inc. (''BX'') 151,800$ 703,873$ 1,390,880$ 2,776,508$
Net Income Per Share of Common Stock, Basic 0.20$ 0.92$ 1.84$ 3.62$
Net Income Per Share of Common Stock, Diluted 0.20$ 0.92$ 1.84$ 3.62

The Current Stock Market Crash

 

The current stock market correction of 10 % of the main US indices DJIA, S&P 500 and Nasdaq Composite is influenced by the hard-action tariffs implemented by the US President Donald Trump against Canada, Mexico, China, The European Unions and various other countries.

Basically, the US presidential administration is waging 'thermo-nuclear' economic war against its recent closes allies trying to beat them, force them to their knee whereby the USA gets excellent deal for its exports.

This goes through a weaker US dollar, contrary to the US presidential administration rhetoric. In theory, a weaker USD would spell rising US stock markets.

The US caused trade tariffs potential disruptions are too great, however. In a trade war, in the short-term both sides lose, according to economic theory. The US can hardly produce bananas or avocados, for example. In addition, the USA lacks sufficient rare earths minerals,  which are vital for its economy. What is more, due to the sheer size of the US economy, the US needs commodities like iron ore, copper, nickel, cobalt, managanese, oil, gas, corn, wheat, etc. which it cannot produce in enough quantities to fulfil its economic needs on its own.

In the long-run, even if the USA wins the trade wars it has started, the short-term disruptions will continue for 2-3 more moths at least, according to Wolfteam Ltd.’s projections and estimates.

So the us 🇺🇸 stock markets will recover in the mid-term, but there could be more short-term US stock market 📉 pain, in Wolfteam Ltd.’s view.

Real Estate Investments Drive Large Part of Blackstone and KKR Value

Blackstone Inc has 315.4 billion USD in real estate assets under management, while KKR & Co Inc manages 163 billion USDs in real estate assets.

Since Blackstone and KKR have the same vein of private equity and private credit investments both in terms of share of assets and structure like Apollo, Carlyle and Ares, but have much higher market capitalization than Apollo, Carlyle and Ares, large part of the value accrued to Blackstone and KKR is largely from their real estate investments and also to a smaller extent from proprietary investments, according to Wolfteam Ltd.'s projections and estimates.

Blackstone and KKR are undervalued, still have much more unlocked value, in Wolfteam Ltd.'s view. 

Blackstone's 2024 earnings statement:

$ in thousands, except per share data) (unaudited) 4Q'23 4Q'24 FY'23 FY'24
Revenues
Management and Advisory Fees, Net 1,648,132$ 1,879,581$ 6,671,260$ 7,188,936$
Incentive Fees 240,417 404,744 695,171 964,178
Performance Allocations (362,474) 507,150 532,173 3,829,153
Principal Investments (298,549) 36,989 (299,331) 712,849
Interest and Dividend Revenue 168,374 98,547 516,497 411,159
Other (110,880) 155,554 (92,929) 123,693
Total Revenues 1,285,020$ 3,082,565$ 8,022,841$ 13,229,968$
Expenses
Compensation and Benefits 543,078 1,039,203 3,312,970 4,994,053
General, Administrative and Other 289,691 339,086 1,117,305 1,361,909
Interest Expense 108,732 115,532 431,868 443,688
Fund Expenses 69 6,296 118,987 19,676
Total Expenses 941,570$ 1,500,117$ 4,981,130$ 6,819,326$
Other Income (Loss) (188,370)$ (21,171)$ (83,997)$ 48,838$
Income Before Provision for Taxes 155,080$ 1,561,277$ 2,957,714$ 6,459,480$
Provision for Taxes 45,957 232,451 513,461 1,021,671
Net Income 109,123$ 1,328,826$ 2,444,253$ 5,437,809$
Redeemable NCI in Consolidated Entities (163,929) 306 (245,518) (61,289)
Non-Redeemable NCI in Consolidated Entities 121,252 624,647 1,298,891 2,722,590
Net Income Attributable to Blackstone Inc. (''BX'') 151,800$ 703,873$ 1,390,880$ 2,776,508$
Net Income Per Share of Common Stock, Basic 0.20$ 0.92$ 1.84$ 3.62$
Net Income Per Share of Common Stock, Diluted 0.20$ 0.92$ 1.84$ 3.62

 

KKR's 2024 earnings 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

KKR And Carlyle Comparison

KKR & Co Inc's assets under management are 638 billion USDs, while Carlyle Group Inc's assets under management are 441 billion USDs.

At 268 billion USD the perpetual capital of KKR is a larger percentage than the 91 billion USDs perpetual capital Carlyle  manages.

 The private equity and private credit part of the assets under management share are roughly equal between KKR and Carlyle.

The larger share of perpetual capital makes for more stable investments and higher potential return on investment for KKR, however.

KKR's market capitalization is 100.72 billion and the company pays 0.62 % dividend yield and Price/Earnings ratio of 34.66  Carlyle's market capitalization is 15.16 billion USD and Carlyle pays dividend yield of 3.30 % with Price/Earnings ratio of 15.30.

Both KKR and Carlyle are grossly undervalued, according to Wolfteam Ltd.'s projections and estimates. 

KKR's intrinsic worth is 142 billion USD, while Carlyle's intrinsic worth is 34 billion USD, in Wolfteam Ltd.'s view.

Carlyle is relatively undervalued compared to KKR.

Stock Markets Are Falling on Uncertainty

 

Stock markets dislike uncertainty.

That is why the tariffs uncertainty has caused Standard and Poor's 500 to enter a correction territory or to fall 10 % below its recent peak,

Unless there is clarity on the way forward for the US economy and US economic policy, the Standard and Poor's 500 could fall 30 % from its peak, according to Wolfteam Ltd.'s projections and estimates.

 

KKR And Apollo Comparison

KKR & Co, Inc or KKR and Apollo Global Management or Apollo are arguably the second and third largest alternative investment management firms active in private markets globally, according to Wolfteam Ltd.'s estimates.

KKR's asset management metrics are the following:

Assets Under Management (“AUM”) of $638 billion, up 15% year-over-year
• Fee Paying Assets Under Management (“FPAUM”) of $512 billion, up 15% year-over-year
• New Capital Raised of $27 billion in the quarter and $114 billion for the year
• Capital Invested of $23 billion in the quarter and $84 billion for the year

Private Equity AUM: Increased 3% quarter-over-quarter and increased 11% year-over-year to $195 billion with organic new capital raised of $10 billion in the quarter and $18 billion for the year

Real Estate AUM: Increased 2% quarter-over-quarter and 27% year-over-year to $166 billion with organic new capital raised of $5 billion in the quarter and $40 billion for the year

Private Credit's AUM comprised of: $130 billion of leveraged credit, $68 billion of asset-based finance, $41 billion of direct lending, $8 billion
of strategic investments and $30 billion of liquid strategies 

Additional Capital Detail
• Dry Powder: Uncalled commitments of $110 billion remain diversified across the firm’s investment strategies
• AUM Not Yet Paying Fees: At year end, there was $57 billion of committed capital with a weighted average management fee rate
of approximately 95 bps that becomes payable when the capital is either invested or enters its investment period
• Carry Eligible AUM: Of the $312 billion of carried interest eligible AUM, $217 billion is above cost and accruing carry
• Performance Fee Eligible AUM: $378 billion, up 14% year-over-year

Apollo manages 751 billion USDs in assets where 616 billion USDs are in private credit and 135 billion USDs are in private equity. Fee generating assets under management of Apollo are 569 billion USDs. So called perpetual capital of Apollo is 447 billion USDs. Perpetual capital are inflows from insurance and retirements premiums which are available for long-term investing and thus one can achieve superior returns on the perpetual capital available to Apollo.

KKR's market capitalization is 102.39 billion USD, while Apollo's market capitalization is 79.44 billion USD. KKR's Price/Earnings ratio is 35.18 and it pays out a 0.61 % dividend yield. Apollo's Price/Earnings ratio is 18 and it does not pay out a dividend yield.

Both KKR and Apollo are undervalued, according to Wolfteam Ltd.'s projections and estimates.

KKR's intrinsic value is 142 billion USDs, while Apollo's intrinsic value is 135 billion USD, according to Wolfteam Ltd.'s projections and estimates. Apollo is relatively undervalued compared to KKR, in Wolfteam Ltd.'s view.

Here are KKR's fourth quarter, year end 2024 results:

Fourth Quarter 2024 GAAP Results (Unaudited)
GAAP Net Income Attributable to KKR & Co. Inc. Common Stockholders was $3.1 billion for the full year 2024
($ in thousands, except per share data) 4Q'23 4Q'24 FY'23 FY'24
Revenues
Asset Management and Strategic Holdings $ 1,564,916 $ 1,426,239 $ 5,807,306 $ 7,212,246
Insurance 2,864,915 1,832,115 8,692,006 14,666,452
Total Revenues $ 4,429,831 $ 3,258,354 $ 14,499,312 $ 21,878,698
Expenses
Asset Management and Strategic Holdings $ 1,212,828 $ 1,140,482 $ 4,162,977 $ 5,759,754
Insurance 2,847,689 1,840,100 8,195,628 15,226,106
Total Expenses $ 4,060,517 $ 2,980,582 $ 12,358,605 $ 20,985,860
Total Investment Income (Loss) - Asset Management and Strategic Holdings $ 1,506,657 $ 1,364,841 $ 4,413,902 $ 4,967,595
Income Tax Expense (Benefit) 286,611 258,330 1,197,523 954,396
Redeemable Noncontrolling Interests 7,323 15,603 (5,405) 73,149
Noncontrolling Interests 541,608 243,125 1,630,230 1,756,643
Preferred Stock Dividends — — 51,747 —
Net Income (Loss) - KKR Common Stockholders $ 1,040,429 $ 1,125,555 $ 3,680,514 $ 3,076,245
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock
Basic $ 1.18 $ 1.27 $ 4.24 $ 3.47
Diluted $ 1.14 $ 1.18 $ 4.09 $ 3.28
Weighted Average Shares of Common Stock Outstanding
Basic 884,998,900 888,222,552 867,496,813 887,021,433
Diluted 912,002,464 956,267,561 911,787,433 938,904,600

Here are Apollos fourth quarter year end 2024 results:

(In millions, except per share amounts) 4Q'23 3Q'24 4Q'24 FY'23 FY'24
Revenues
Asset Management
Management fees $444 $476 $523 $1,772 $1,899
Advisory and transaction fees, net 141 181 205 623 822
Investment income (loss) 150 230 395 1,032 1,305
Incentive fees 21 35 42 80 150
Retirement Services
Premiums 3,586 389 155 12,749 1,318
Product charges 226 267 260 848 1,016
Net investment income 3,354 4,101 4,237 12,080 15,718
Investment related gains (losses) 2,621 1,539 (1,037) 1,428 2,045
Revenues of consolidated variable interest entities 495 552 493 1,441 1,822
Other revenues 8 3 10 591 19
Total Revenues 11,046 7,773 5,283 32,644 26,114
Expenses
Asset Management
Compensation and benefits (979) (605) (732) (2,722) (2,608)
Interest expense (47) (55) (67) (145) (226)
General, administrative and other (229) (326) (285) (872) (1,170)
Retirement Services
Interest sensitive contract benefits (2,595) (2,599) (1,642) (6,229) (8,949)
Future policy and other policy benefits (4,088) (793) (623) (14,434) (3,054)
Market risk benefits remeasurement gains (losses) (570) (524) 456 (404) 102
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (186) (244) (263) (688) (941)
Policy and other operating expenses (481) (670) (535) (1,837) (2,136)
Total Expenses (9,175) (5,816) (3,691) (27,331) (18,982)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities 21 15 25 7 58
Net gains (losses) from investment activities of consolidated variable interest entities 35 44 20 130 90
Other income (loss), net 34 70 87 136 155
Total Other Income (Loss) 90 129 132 273 303
Income (loss) before income tax (provision) benefit 1,961 2,086 1,724 5,586 7,435
Income tax (provision) benefit1 1,620 (317) (62) 923 (1,062)
Net income (loss) 3,581 1,769 1,662 6,509 6,373
Net (income) loss attributable to non-controlling interests (825) (958) (176) (1,462) (1,796)
Net income (loss) attributable to Apollo Global Management, Inc. 2,756 811 1,486 5,047 4,577
Preferred stock dividends (24) (24) (24) (46) (97)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $2,732 $787 $1,462 $5,001 $4,480
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $4.53 $1.30 $2.42 $8.32 $7.39
Net income (loss) attributable to Common Stockholders - Diluted $4.44 $1.29 $2.39 $8.28 $7.33
Weighted average shares outstanding - Basic 584 585 584 581 586
Weighted average shares outstanding - Diluted 601 589 603 589 604
 

 

 

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.