Apollo Global Management LLC Posts Weak Profit

Apollo Global Management LLC Posts Weak Profit

In a surprise earnings miss, Apollo Global Management LLC (NYSE:APO) reported on Wednesday, August 6th, that its second-quarter earnings were off by around 6%, under consensus analysts expectations. Digging into the 2Q report, analysts point out that Apollo sold fewer of its private equity holdings while both taxes and expenses rose during the period.

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Details on 2Q earnings report

Total economic net income after taxes came to $207.5 million, relative to $220.1 million same quarter last year. This resulted in an ENI per share after taxes of 52 cents, below analysts estimate of 66 cents, according to Thomson Reuters.

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The firm cited a higher tax provision and increased profit-sharing expenses for the $12.6 million reduction in ENI.

Apollo Management’s private equity portfolio was up 5% the quarter, close to the same percentage as both The Carlyle Group LP (NASDAQ:CG)‘s and KKR & Co. L.P. (NYSE:KKR)‘s private equity funds, but below the 8.4% appreciation seen in The Blackstone Group L.P. (NYSE:BX)’s buyout funds.


ENI in Apollo’s private equity segment fell 32%. on the other hand, ENI was up 114% in the credit segment due to higher management fees as Athene Holding Ltd life insurance firm finalized the acquisition of the U.S. life and annuities business of Aviva Plc (ADR) (NYSE:AV) (LON:AV). Of note, the credit segment represents almost two-thirds of Apollo’s assets.

Total assets under management were $167.5 billion at the end of the period (June 30th), an increase from $159.3 billion at the end of the prior quarter.

The hedge fund firm declared a 2Q dividend of 46 cents, a major improvement from 1.32 cents a year ago.

Other private equity firms increasingly profitable

Apollo Global Management LLC (NYSE:APO) poor second quarter performance caught market watchers by surprise given that most private equity firms had turned in strong quarters. The Blackstone Group L.P. (NYSE:BX), KKR & Co. L.P. (NYSE:KKR) and The Carlyle Group LP (NASDAQ:CG), for example, all reported significantly increased profits.

RBC rates Apollo Management as Sector Perform

Equity research firm RBC Capital Markets published a note to update investors after Apollo Global Management LLC (NYSE:APO) second quarter earnings report. Head analyst Buletn Ozcan suggests that that Apollo’s 2Q report wasn’t all that bad. “Total revenues for Apollo’s combined segments stabilized. While the company had reported a significant decline in total revenues in the previous quarter, the current quarter was marked by a 14% sequential increase in revenues. Fee generating AUM stood at $130.3B, up from $128.5B reported as of 1Q/14.”

RBC currently rates Apollo Management as Sector Perform and has a $25.89 price target on the equity.


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