Ares Management Is Undervalued

 

Ares Management Corp or shortly Ares, one of the leading global alternative asset managers is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Ares manages a total of 545.9 billion USDs of assets with 335.1 billion USDs in fee paying assets under management. The 545.9 billion USDs of Ares' asset management are distributed in 359.1 billion USDs in credit, 124.2 billion USDs in real estate, 24.7 billion USDs in private equity, 31.3 billion USDs in secondaries and 6.6 billion USDs in other businesses. 

Private credit is in a boom phase globally as many mid sized companies, to a large part from the technology sector are looking to borrow at 7 % to 14 % annual interest rates, loans which are avoided by money center banks and even regional banks, but which are the sweet spot for the largest private credit managers like Ares Management.

The artificial intelligence, AI fourth industrial revolution we are experiencing is in a full swing and lifts the fortunes of most small, medium sized and large, hyperscalers technology companies. These technology companies are in need of large amounts of funds to grow and mid and large private credit asset managers like Ares provide the much needed fuel for these technology companies' growth ambitions.

The global artificial intelligence, AI race is in full motion with USA leading the pack, China as close second and the European Union ramping up its efforts as well.

To produce artificial intelligence, AI companies need access to or to build large data and computational centers, which mostly cost billions of  US dollars. Technology companies are known for their financial leverage. They borrow extensively. Since most mid-sized technology companies are BB or B rated by the leading credit agencies, they tend to borrow at 7 % to 14 % interest rates both on the lending marked and the high yield bonds market. Ares Management and other large alternative asset managers are more than happy to provide the funds these AI companies need.

So long as the global economy is growing and the artificial intelligence, AI wave keep rising and moving along these mid sized technology AI companies will mostly pay off their loans and Ares Management's business will keep booming. Even in a recession however, many companies will enter distress and will need financing at 7 % to even 16 % interest rates per annum. So at first in a recession Ares Management business will encounter difficulties and make losses, but in the long term Ares will continue displacing banks and win lending market share globally, even in an economic downturn. In an economic recession and the following recovery Ares earnings will slowly recover

Ares Management's intrinsic value based on the artificial intelligence, AI and private credit boom is 93 billion USD, according to Wolfteam Ltd.'s projections and estimates,  compared to Ares Management's current market capitalization of 54.05 billion USDs.

 

Ares Management delivered strong 1 Quarter 2025 earnings as shown below:

$ in thousands, except share data 2025 2024
Revenues
Management fees $816,987 $687,692
Carried interest allocation 160,008 (32,478)
Incentive fees 32,048 8,667
Principal investment income 21,998 7,050
Administrative, transaction and other fees 57,764 36,432
Total revenues 1,088,805 707,363
Expenses
Compensation and benefits 657,125 412,951
Performance related compensation 122,633 (50,532)
General, administrative and other expenses 227,914 170,928
Expenses of Consolidated Funds 6,656 5,146
Total expenses 1,014,328 538,493
Other income (expense)
Net realized and unrealized gains on investments 268 10,516
Interest and dividend income 17,656 5,382
Interest expense (36,387) (37,824)
Other income (expense), net (10,714) 270
Net realized and unrealized gains on investments of Consolidated Funds 88,406 34,424
Interest and other income of Consolidated Funds 160,072 257,276
Interest expense of Consolidated Funds (152,740) (207,866)
Total other income, net 66,561 62,178
Income before taxes 141,038 231,048
Income tax expense 17,537 27,233
Net income 123,501 203,815
Less: Net income attributable to non-controlling interests in Consolidated Funds 55,977 66,716
Net income attributable to Ares Operating Group entities 67,524 137,099
Less: Net income attributable to redeemable interest in Ares Operating Group entities 316 73
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 20,038 63,999
Net income attributable to Ares Management Corporation 47,170 73,027
Less: Series B mandatory convertible preferred stock dividends declared 25,313 —
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders $21,857 $73,027
Net income per share of Class A and non-voting common stock:
Basic $0.00 $0.33
Diluted $0.00 $0.33
Weighted-average shares of Class A and non-voting common stock:
Basic 209,350,849 192,622,609
Diluted 209,350,849 192,622,609 

Oil Is To Surpass 80 USD On Better Economy And Geopolitical Unrest

 

Oil's price will surpass 80 USD in 2025 on better global economy and ongoing political unrest, according to Wolfteam Ltd.'s projections and estimates.

Now that it is clear that tariffs are a negotiating strategy of Donald Trump's US Presidential administration the US and global economy will recover from the first negative growth quarter for the US and slow global growth in 1Q 2025.

In addition, geopolitical unrest, namely the Russia Ukraine, the Gaza, India Pakistan conflicts and the simmering tensions surrounding Iran, which is the 5th largest oil producer are here to stay in the short-term.

All these factors will combine to push oil's prices higher than the 80 USD mark both for West Texas Intermediate and Brent sorts, in Wolfteam Ltd.'s view. 

Consecutively, all the oil majors, namely Exxon Mobil, Chevron, Royal Dutch Shell, BP, Total and mid sized oil producers like Occidental Petroleum, Devon Energy, Duke Energy etc. are structurally mid-term and long-term undervalued.

Ares Management 1 Quarter 2025 Earnings Comment

 

Ares Management Corp reported net income of 47.2 million USD for 1Q 2025 compared with 73 million USD net income for 1Q 2024. 

Revenues, though were much stronger in 1Q 2025 with 1.1 billion USD in revenues for 1Q 2025 compared with 707.4 million USD for 1Q 2024. 

With total assets under management of 545.9 billion USDs distributed in credit with 359.1 billion USDs, real assets with 124.2 billion USDs and 24.7 billion USDs in private equity Ares Management is one of the global leaders in the alternative asset management industry.

Private credit, where Ares is a top global company is in a boom phase and Ares is poised to ride the up wave in a great and profitable way which will unlock tens of billions of USDs of additional value for Ares Management's shareholders.

In short, due to the global booming private markets Ares Management is undervalued, according to Wolfteam Ltd.'s projections and estimates.

Below is Ares Management's 1Q 2025 earnings statement:

 $ in thousands, except share data  Three months ended March 31, 2025 2024
Revenues
Management fees $816,987 $687,692
Carried interest allocation 160,008 (32,478)
Incentive fees 32,048 8,667
Principal investment income 21,998 7,050
Administrative, transaction and other fees 57,764 36,432
Total revenues 1,088,805 707,363
Expenses
Compensation and benefits 657,125 412,951
Performance related compensation 122,633 (50,532)
General, administrative and other expenses 227,914 170,928
Expenses of Consolidated Funds 6,656 5,146
Total expenses 1,014,328 538,493
Other income (expense)
Net realized and unrealized gains on investments 268 10,516
Interest and dividend income 17,656 5,382
Interest expense (36,387) (37,824)
Other income (expense), net (10,714) 270
Net realized and unrealized gains on investments of Consolidated Funds 88,406 34,424
Interest and other income of Consolidated Funds 160,072 257,276
Interest expense of Consolidated Funds (152,740) (207,866)
Total other income, net 66,561 62,178
Income before taxes 141,038 231,048
Income tax expense 17,537 27,233
Net income 123,501 203,815
Less: Net income attributable to non-controlling interests in Consolidated Funds 55,977 66,716
Net income attributable to Ares Operating Group entities 67,524 137,099
Less: Net income attributable to redeemable interest in Ares Operating Group entities 316 73
Less: Net income attributable to non-controlling interests in Ares Operating Group entities 20,038 63,999
Net income attributable to Ares Management Corporation 47,170 73,027
Less: Series B mandatory convertible preferred stock dividends declared 25,313 —
Net income attributable to Ares Management Corporation Class A and non-voting common stockholders $21,857 $73,027
Net income per share of Class A and non-voting common stock:
Basic $0.00 $0.33
Diluted $0.00 $0.33
Weighted-average shares of Class A and non-voting common stock:
Basic 209,350,849 192,622,609
Diluted 209,350,849 192,622,609
GAAP Statements of Operations
 

 

Tariffs Will Not Cause A Recession

Tariffs will not cause a US recession, according to Wolfteam Ltd.'s projections and estimates.

US tariffs turned out to be a negotiating strategy of Donald Trump's US Presidential administration.

That said, tariffs will have a relatively soft effect on the US economy.

Carlyle 1 Quarter 2025 Earnings Comment

Carlyle Group Inc reported 130 million USDs in net profit in 1Q 2025 compared with 65.6 million USDs in net profit in 1Q 2024.

Revenue for 1Q 2025 was 973 million USDs compared with revenue of 688 million USDs for 1Q 2024.

With 453 billion USDs of assets under management Carlyle's main business lines of global private equity with 164 billion USDs and global credit with 199 billion USDs of assets under management continue to be booming, according to Wolfteam Ltd.'s projections and estimates.

Carlyle continues to benefit from the private markets boom wave of private equity and private credit growth.

Carlyle with market capitalization of 17.1 billion USDs is undervalued by public markets in Wolfteam Ltd.'s view.

Here is Carlyle's 1Q 2025 statement of comprehensive income:

EVENUES
Fund management fees $ 523.6 $ 586.1 $ 2,066.0 $ 2,250.6
Incentive fees 26.2 43.2 100.1 150.5
Investment income (loss), including performance allocations (83.9) 159.8 (211.6) 2,498.1
Revenue from consolidated entities 164.9 133.4 613.1 600.1
All other revenues 57.6 50.6 225.7 211.2
Total Revenues 688.4 973.1 2,793.3 5,710.5
EXPENSES
Cash-based compensation and benefits 221.9 218.4 985.4 872.0
Equity-based compensation 108.3 103.5 303.0 463.1
Performance allocations and incentive fee related compensation (72.8) 171.4 925.2 1,605.7
General, administrative and other expenses 147.7 173.6 640.6 691.5
Expenses from consolidated entities 124.6 113.5 450.0 553.8
Interest and other non-operating expenses 31.0 27.8 125.2 117.5
Total Expenses 560.7 808.2 3,429.4 4,303.6
Net investment income (loss) of consolidated funds (7.0) 6.1 (3.7) 37.1
Income (loss) before provision for income taxes1 120.7 171.0 (639.8) 1,444.0
Provision (benefit) for income taxes 21.9 12.4 (116.6) 293.1
Net income (loss) 98.8 158.6 (523.2) 1,150.9
Net income attributable to non-controlling interests 33.2 28.6 120.3 66.1
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ 65.6 $ 130.0 $ (643.5) $ 1,084.8
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ 0.18 $ 0.36 $ (1.78) $ 3.03
Diluted $ 0.18 $ 0.35 $ (1.78) $ 2.95
Margin on income (loss) before provision for taxes2 17.5 % 17.6 % (22.9) % 25.3 %
Effective tax rate 18.1 % 7.3 % 18.2 % 20.3 %
Net performance revenues3 $ (84.2) $ 51.5 $ (1,331.6) $ 789.9

Apollo 1 Quarter 2025 Earnings Comment

 

Apollo Global Management Inc. reported net income of 418 million USD for the 1Q 2025 compared to 1.4 billion USD net income for the 1Q 2024.

Despite the decline in net income in 1Q 2025, Apollo's main business line of private credit with 641 billion USDs of assets under management goes on booming, according to Wolfteam Ltd.'s projections and estimates.

Apollo's private equity business line with 144 billion USDs also performs very well. Apollo is on the cusp of the global private markets wave with 785 billion USDs in private assets under management.

 Here is Apollo's 1Q 2025 income statement:

 (In millions, except per share amounts) 1Q'24 4Q'24 1Q'25
Revenues
Asset Management
Management fees $438 $523 $508
Advisory and transaction fees, net 169 205 195
Investment income (loss) 402 395 303
Incentive fees 26 42 40
Retirement Services
Premiums 101 155 127
Product charges 238 260 265
Net investment income 3,576 4,237 4,341
Investment related gains (losses) 1,677 (1,037) (828)
Revenues of consolidated variable interest entities 411 493 592
Other revenues 2 10 5
Total Revenues 7,040 5,283 5,548
Expenses
Asset Management
Compensation and benefits (667) (732) (745)
Interest expense (51) (67) (60)
General, administrative and other (240) (285) (308)
Retirement Services
Interest sensitive contract benefits (2,884) (1,642) (1,494)
Future policy and other policy benefits (543) (623) (541)
Market risk benefits remeasurement gains (losses) 154 456 (385)
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (207) (263) (267)
Policy and other operating expenses (453) (535) (542)
Total Expenses (4,891) (3,691) (4,342)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities 39 25 (18)
Net gains (losses) from investment activities of consolidated variable interest entities 25 20 211
Other income (loss), net (26) 87 (218)
Total Other Income (Loss) 38 132 (25)
Income (loss) before income tax (provision) benefit 2,187 1,724 1,181
Income tax (provision) benefit (422) (62) (243)
Net income (loss) 1,765 1,662 938
Net (income) loss attributable to non-controlling interests (338) (176) (496)
Net income (loss) attributable to Apollo Global Management, Inc. 1,427 1,486 442
Preferred stock dividends (24) (24) (24)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $1,403 $1,462 $418
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $2.31 $2.42 $0.68
Net income (loss) attributable to Common Stockholders - Diluted $2.28 $2.39 $0.68
Weighted average shares outstanding - Basic 588 584 587
Weighted average shares outstanding - Diluted 605 603 593

 

 

Private Equity Firms Will Recover Strongly

 

Now that is clear that Donald Trump US Presidential administration' tariffs were a marketing, negotiation tactic the US and global stock markets are poised to recover fully and clock in new all time highs.

The leading private equity firms' stocks like Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. will recover stronger than the general market and the leading private equity firms' stocks market capitalization will reach new all time highs in 2025, according to Wolfteam Ltd.'s projections and estimates.

KKR 1 Quarter 2025 Earnings Announcement Comment

 

KKR & Co Inc announced a net loss of 0.2 billion USDs on 3.1 billion USDs of revenue for 1Q2025 compared to net income of 0.7 billion USDs on 9.7 billlion USDs in revenue in 1Q 2024.

That said for the rolling 12 months as of 1Q 2025 KKR announced 2.2 billion USDs in net income on 15.3 billion USDs in revenue compared with 4.0 billion USDs in net income on 21 billion USDs in revenue for the rolling 12 months as of 1Q 2024. 

Despite the slowdown in net income and revenue KKR goes on strong in its investment thesis of investing in artificial intelligence, AI data infrastructure and the energy and delivery sector that powers the AI future.

At 104.88 billion USDs market capitalization, KKR is undervalued, according to Wolfteam Ltd.'s projections and estimates. If all KKR's owned properties including companies, real estate and its insurance business arm are sold they will get more money that KKR's current market capitalization, according to back of the napkin sum of the parts valuation performed by Wolfteam Ltd.

KKR is valued as an AI company at present.

Here is KKR's 1Q 2025 earnings release:

GAAP Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders was $(0.2) billion for the quarter and
$2.2 billion in the LTM.
($ in thousands, except per share data) 1Q'24 1Q'25 1Q'24 LTM 1Q'25 LTM
Revenues
Asset Management and Strategic Holdings $ 1,956,468 $ 2,045,915 $ 6,637,740 $ 7,301,693
Insurance 7,700,270 1,064,268 14,390,828 8,030,450
Total Revenues $ 9,656,738 $ 3,110,183 $ 21,028,568 $ 15,332,143
Expenses
Asset Management and Strategic Holdings $ 1,617,969 $ 1,667,900 $ 4,969,438 $ 5,809,685
Insurance 7,694,975 2,163,055 13,842,028 9,694,186
Total Expenses $ 9,312,944 $ 3,830,955 $ 18,811,466 $ 15,503,871
Total Investment Income (Loss) - Asset Management and Strategic Holdings $ 1,019,257 $ 1,491,839 $ 5,292,123 $ 5,440,177
Income Tax Expense (Benefit) 269,201 86,569 1,317,977 771,764
Redeemable Noncontrolling Interests 32,678 8,494 34,576 48,965
Noncontrolling Interests 378,958 861,928 2,082,191 2,239,613
Preferred Stock Dividends — — 34,497 —
Net Income (Loss) - KKR Common Stockholders $ 682,214 $ (185,924) $ 4,039,984 $ 2,208,107
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock
Basic $ 0.77 $ (0.22) $ 4.63 $ 2.47
Diluted $ 0.74 $ (0.22) $ 4.46 $ 2.32
Weighted Average Shares of Common Stock Outstanding
Basic 885,005,824 888,246,698 873,421,040 887,826,075
Diluted 925,141,166 888,246,698 914,564,951 946,906,375

Blackstone 1 Quarter 2025 Earnings Announcement Comment

 

Blackstone Inc announced 1.2 billion USD in net income for 1Q 2025 and 5.1 billion USDs net income for the last 12 months.

Blackstone Inc reported 3.289 billion USD in revenue for 1Q 2025 and 12.8 billion USDs in revenue for the last 12 months.

Revenue in 1Q 2025 was below the 3.7 billion 1Q 2024 number. Net income in Q1 2025 was also below the 1.6 billion reported for 1Q 2024. 

Net income and revenue however for the trailing 12 months for 1Q 2025 were around 20 %  higher than the trailing 12 months for 1Q 2024.

That underlies Blackstone's success as the company furthers its quest to power the artificial intelligence, AI revolution via the investments it manages.

Blackstone's main strategy is to invest in AI data centers infrastructure and the energy that powers them. As we are witnessing the AI boom, Blackstone's strategy bears fruit and Blackstone's market capitalization is 169.11 billion USDs down from more than 220 billion USD in market capitalization Blackstone is recently valued.

Blackstone via its earnings and revenue multiples is valued more like an artificial intelligence, AI company, according to Wolfteam Ltd.'s projections and estimates.

This is a natural consequence of Blackstone's strategy to use the money it manages to invest in artificial intelligence, AI related infrastructure and energy, in Wolfteam Ltd.'s view.

Below are Blackstone's 1Q 2025 financial results:

GAAP Net Income was $1.2 billion for the quarter and $5.1 billion over the last twelve months (“LTM”). GAAP Net
Income Attributable to Blackstone Inc. was $615 million for the quarter and $2.5 billion over the LTM.
Throughout this presentation, all current period amounts are preliminary and unaudited. Totals may not add due to rounding. See pages 36-38, Definitions and
Dividend Policy, for definitions of terms used throughout this presentation. NCI means non-controlling interests.($ in thousands, except per share data) (unaudited) 1Q'24 1Q'25 1Q'24 LTM 1Q'25 LTM
Revenues
Management and Advisory Fees, Net 1,727,148$ 1,904,317$ 6,740,093$ 7,366,105$
Incentive Fees 179,341 191,825 731,636 976,662
Performance Allocations 1,098,460 825,251 1,742,951 3,555,944
Principal Investments 540,220 344,255 624,248 516,884
Interest and Dividend Revenue 97,839 97,420 523,851 410,740
Other 44,820 (73,610) (33,955) 5,263
Total Revenues 3,687,828$ 3,289,458$ 10,328,824$ 12,831,598$
Expenses
Compensation and Benefits 1,308,304 1,431,840 3,858,163 5,117,589
General, Administrative and Other 369,950 332,373 1,213,861 1,324,332
Interest Expense 108,203 118,115 435,630 453,600
Fund Expenses 3,950 12,104 74,538 27,830
Total Expenses 1,790,407$ 1,894,432$ 5,582,192$ 6,923,351$
Other Income (Loss) (17,767)$ 57,575$ (167,620)$ 124,180$
Income Before Provision for Taxes 1,879,654$ 1,452,601$ 4,579,012$ 6,032,427$
Provision for Taxes 283,671 243,827 749,457 981,827
Net Income 1,595,983$ 1,208,774$ 3,829,555$ 5,050,600$
Redeemable NCI in Consolidated Entities (39,669) 7,900 (278,487) (13,720)
Non-Redeemable NCI in Consolidated Entities 788,266 586,022 1,955,588 2,520,346
Net Income Attributable to Blackstone Inc. (''BX'') 847,386$ 614,852$ 2,152,454$ 2,543,974$
Net Income Per Share of Common Stock, Basic 1.12$ 0.80$ 2.84$ 3.31$
Net Income Per Share of Common Stock, Diluted 1.11$ 0.80$ 2.84$ 3.31

Tariffs Effect On Carlyle

 

With 453 billion USDs of assets under management as of 31 March 2025 Carlyle Group Inc is one of the leading alternative investment management firms.

164 billion USDs of Carlyle's assets under management are in private equity, 199 billion USDs in private credit and 89 billion USDs in Carlyle AlpInvest, which is also doing private equity. 282 billions USDs of Carlyle's assets insurance solutions by product type.

It is clear that tariffs stand to affect Carlyle most by disrupting Carlyle's private equity and private credit business. This could happen if tariffs invoke a recession which raises interest rates and disrupts Carlyle's private equity business by hindering Carlyle's ability to borrow cheaply via high yield debt with which to finance the leveraged buyouts it purchases. 

Along the lines of private credit Carlyle's business could be disrupted by tariffs if the 7% to 14 % interest rates at which Carlyle lends to mid-market businesses via its private credit assets under management shoot up to 10 % - 17 % for example. This could make borrowing prohibitively expensive for growing mid-market companies and thus decrease Caryle's private credit business volumes.

In the long run, Carlyle stands to gain from tariffs disruption, according to Wolfteam Ltd.'s projections and estimates.

After the tariffs invoked chaos, Carlyle will go on displacing banks from high-risk lending and from the tariffs upheaval Carlyle will raise its high yield and bank debt volumes together with banks to purchase distressed assets in leveraged buyouts. After the tariffs shock subsides leveraged buyouts will boom again, in Wolfteam Ltd.'s view driven by firms' desire for growth. 

Here are Carlyle's first quarter 2025 financial results:

 REVENUES
Fund management fees $ 523.6 $ 586.1 $ 2,066.0 $ 2,250.6
Incentive fees 26.2 43.2 100.1 150.5
Investment income (loss), including performance allocations (83.9) 159.8 (211.6) 2,498.1
Revenue from consolidated entities 164.9 133.4 613.1 600.1
All other revenues 57.6 50.6 225.7 211.2
Total Revenues 688.4 973.1 2,793.3 5,710.5
EXPENSES
Cash-based compensation and benefits 221.9 218.4 985.4 872.0
Equity-based compensation 108.3 103.5 303.0 463.1
Performance allocations and incentive fee related compensation (72.8) 171.4 925.2 1,605.7
General, administrative and other expenses 147.7 173.6 640.6 691.5
Expenses from consolidated entities 124.6 113.5 450.0 553.8
Interest and other non-operating expenses 31.0 27.8 125.2 117.5
Total Expenses 560.7 808.2 3,429.4 4,303.6
Net investment income (loss) of consolidated funds (7.0) 6.1 (3.7) 37.1
Income (loss) before provision for income taxes1 120.7 171.0 (639.8) 1,444.0
Provision (benefit) for income taxes 21.9 12.4 (116.6) 293.1
Net income (loss) 98.8 158.6 (523.2) 1,150.9
Net income attributable to non-controlling interests 33.2 28.6 120.3 66.1
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ 65.6 $ 130.0 $ (643.5) $ 1,084.8
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ 0.18 $ 0.36 $ (1.78) $ 3.03
Diluted $ 0.18 $ 0.35 $ (1.78) $ 2.95
Margin on income (loss) before provision for taxes2 17.5 % 17.6 % (22.9) % 25.3 %
Effective tax rate 18.1 % 7.3 % 18.2 % 20.3 %
Net performance revenues3 $ (84.2) $ 51.5 $ (1,331.6) $ 789.9
Carlyle First Quarter 2025 U.S. GAAP Results
 

The Federal Reserve Will Cut Rates Two Times in 2025

 

The Federal Reserve will cut rates two times in 2025 to spur economic activity, which could get affected by Donald Trump's presidential administration tariffs, in Wolfteam Ltd.'s view.

The Federal Reserve will try to stave off a possible tariffs induced recession.

 

Tariffs Effect On Ares

 

Ares Management Corp is one of the leaders in private credit globally.

If tariffs imposed by the Donald Trump US presidential administration cause a global recession, high yield credit rates will shoot up.

This will temporarily incur losses on Ares.

In the long-run, however Ares Management Corp will further displace banks in lending to mid-cap high yield borrowers at 7 % to 14 % interest rates. The newly won market share will unlock more than 10 billion USDs in value for Ares, according to Wolfteam Ltd.'s projections and estimates.

 

 

Tariffs Effect on Apollo Global Management

 

Apollo Global Management manages 751 billion USD of assets of which 616 billion USD in private credit, which makes Apollo number one in private credit, worldwide.

If the tariffs imposed by the US President Donald Trump's presidential administration cause a recession, interest on high-yield credits and high-yield bonds will shoot up. Money center banks and even regional banks even as we speak balk at lending at 7 % to 14 % interest rates, the usual target of large private credit investment managers as Apollo. In case of a recession and higher rates on distressed loans banks will even further withdraw from lending to mid-market risky firms. This will be a golden opportunity for Apollo to expand its private credit market share, according to Wolfteam Ltd.'s projections and estimates

If the US tariffs do not cause a recession, Apollo will continue to ride high on the private credit wave. As stated above with 616 billion USD Apollo is the largest alternative credit manager in the world. Apollo displaces banks in lending to mid-cap corporate at rates of 7 % to 14 %. These high yield borrowers constantly are in need of capital and Apollo provides capital to these risky borrowers to finance their leveraged growth. If there is no recession, the delinquency rates of mid-cap risky borrows will remain stable and low and this will grease Apollo's private credit business to even new and higher highs.

In short, the US tariffs will provide a golden opportunity for Apollo to unlock tens of billions of USD of additional value, in Wolfteam Ltd.'s view. In both scenarios of a recession or continued economic growth.

Tariffs And Private Equity Investments

 

If tariffs cause a recession, this will hurt private equity firms leveraged buyouts investments. On the other hand, however, alternative asset management firms will gain market share in a recession, according to Wolfteam Ltd.'s projections and estimates.

The cost of servicing the debt will go up, which will decrease the return on investment of private equity firms, because their investments will be discounted at a higher interest rate.

In addition, the private credit business lines of the biggest alternative asset management firms will incur losses if tariffs cause a recession, which could make the yields on high-yield bonds rise substantially. 

In addition, if interest rates shoot up the real estate investments of the leading alternative investment management firms will fall in value, because they will be discounted at higher interest rates and thus the value of real estate investments will fall in value.

On the flip side, however, alternative investment management firms will be able to buy up assets at distressed values and gain market share at the expense of corporate and investment banks.

At 7 % to 14 % interest for loans to mid market firms in recession times only private credit business arms of alternative asset management  firms can provide financing and thus private equity firms will gain market share.