Why Private Equity Companies Are Underperforming The Market?

 

The main reason private equity stocks are under-performing the S&P 500 in the last 5-7 months is the high concentration of private equity firms' investments in artificial intelligence, AI data centers, delivery centers and other infrastructure, according to Wolfteam Ltd.'s projections and estimates.

The leading private equity firms like Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc. have invested via their private equity, real estate, private credit assets under management heavily and also often in a leveraged way in artificial intelligence, AI.

And the recent AI stock market correction caused a disproportionate fall in the leading private equity firms' stocks, which have not recovered as the AI firms' stocks did.

The main reason for this development is the leveraged nature of  Blackstone, KKR, Apollo, Carlyle, Ares, CVC etc.'s investments.

Most probably, however in time the private equity firms' stocks could recover more strongly than the market due again to their leveraged nature.