Among the major publicly traded asset managers in US, Credit Suisse Group AG (NYSE:CS)’s analysts see the highest upside in Apollo Group Inc (NASDAQ:APOL), The Blackstone Group L.P. (NYSE:BX) and Carlyle Group LP (NASDAQ:CG) for the running year.
Credit Suisse Group AG (NYSE:CS) has launched Alternative Asset Manager Scorecard which grades the managers based on their AUM growth and composition, returns, sector valuation, new commitments, Level I and Level II asset trends, cash distributions, cash earnings composition etc . The scorecard is currently following, Apollo Group Inc (NASDAQ:APOL), Carlyle Group LP (NASDAQ:CG), KKR & Co. L.P. (NYSE:KKR) and Oaktree Capital Group LLC (NYSE:OAK).
Credit Suisse Group AG (NYSE:CS) analysts give props to the money managing sector for diversifying their portfolios and adding acquisitions that allowed them to experiment in new sectors. Carlyle Group LP (NASDAQ:CG) bought TCW Group last year, Societe Generale holds a majority stake in TCW Group. Carlyle Group LP (NASDAQ:CG) also bought a stake in Focus Media Holding Limited (NASDAQ:FMCN) which was surrounded by controversy due to the accusations of fraud pointed at the Chinese digital media company.
The Blackstone Group L.P. (NYSE:BX) has recently put up a bid to buy Dell Inc. (NASDAQ:DELL) at $14.25 per share, the asset managers also reported stronger than expected earnings in 4Q2012. Morgan Stanley has also reaffrimed its Overweight rating on BX while adding that Blackstone is the best pick among US asset managers. Apollo Global bought the education division of The McGraw-Hill Companies Inc. and also bought Twinkies from the Hostess Brands.
Despite of the diversification of portfolios, the fundamental drivers of earnings is still the performance in the private equity sector. The asset managers are commonly referred to as private equity firms, even though only 35 percent of the AUM is invested in that sector. Credit Suisse Group AG (NYSE:CS) notes that in 2012, private equity represented 60 percent of the main earnings metric. In this regard The Blackstone Group L.P. (NYSE:BX) appears to be the most balanced, where only 20 percent of the cash and distributed earnings stem from private equity.
Net accured performance fee is increasing on average which is a positive indicator for the asset management sector. Highest net accured performance fee has been charged by Oaktree Capital Group LLC (NYSE:OAK). Specifically Level I and II assets increased 6.2 percent in 2012 with Apollo showing the highest percentage. Apollo was also on top with highest distribution yield, CS expects 8 percent yield for 2013,
The report from Credit Suisse Group AG (NYSE:CS) expects earnings growth and expansion in cash distribution in the sector going forward.