Apollo Investment Attracts Blue Whale's Yiu Amid "Low Quality" Asset Managers Concerns

Blue Whale's Stephen Yiu has been investing in private credit giant Apollo, believing it offers better prospects than traditional asset managers. He sees Apollo's 20% annual AUM growth as "ridiculous" and views traditional asset managers as "low quality businesses." The stock has been added to the £1.4bn Blue Whale Growth fund's top 10 and makes up around 5% of the portfolio.

Apollo Global Management (APO) has achieved a significant milestone, with its assets under management (AUM) reaching a new record of $840 billion, according to the latest financial report [1]. This growth, which includes a $61 billion increase during the second quarter, is largely attributed to market volatility under the Trump administration's tariffs. Institutional investors and high-net-worth individuals have been key contributors to this expansion, accounting for two-thirds of the total growth.

CEO Marc Rowan emphasized the company's strategic fundraising efforts during market downturns, utilizing $11.7 billion in financing from its subsidiary Athene, borrowed from the Federal Home Loan Banks. Rowan expressed confidence in Apollo's investment team, noting that returns from these loans exceed their costs, ensuring profitability.

Apollo is positioning itself to enter the U.S. pension market, pending an executive order that could open the $9 trillion market to private investment strategies. Rowan highlighted the firm's plans to offer retirees more diversified and lucrative pension plans.

In Q2, Apollo made notable investments, including a £4.5 billion loan to EDF for the Hinkley Point C nuclear plant and financing Thoma Bravo's acquisition of Jeppesen. These investments, along with Apollo's Q2 revenue reaching $6.81 billion and earnings per share (EPS) at $1.92, have positioned the company for continued growth.

Additionally, Apollo Global Management's funds have agreed to acquire a majority stake in Stream Data Centers (SDC), a hyperscale data center developer [2]. This investment, driven by the growing demand for data centers fueled by AI, positions SDC to execute on a multi-gigawatt pipeline. The acquisition aligns with Apollo's strategy to invest in next-generation digital infrastructure, with the company planning to scale its investments in these areas over the coming years.

The stock of Apollo Global Management (APO) rose by 1.0% in premarket trading following the announcement of these strategic investments and the company's strong Q2 performance.

References:
[1] https://www.gurufocus.com/news/3039033/apollo-global-management-apo-reaches-record-aum-amid-market-volatility?mobile=true
[2] https://seekingalpha.com/news/4479766-apollo-funds-to-acquire-majority-stake-in-hyperscale-data-center-developer