From Baron Funds' second quarter commentary:
The Carlyle Group (CG, Financial) is one of the largest diversified alternative asset managers with nearly $150 billion in client assets. Alternative asset managers continue to gain share within the investment management industry as investors seek above market returns with less volatility than traditional equity markets. Additionally, these flows have increasingly migrated towards the few elite alternative firms including Carlyle and away from the perceived more riskier upstarts. We expect this combination to continue to be a tailwind for Carlyle's asset accumulation. Further, Carlyle distinguishes itself from the other elite alternative managers by its investment portfolios that are more diversified across disciplines and geography. This deep range of products enables Carlyle to achieve a greater share of client's wallet than competitors. Nearly 60% of its investors hold more than six distinct Carlyle products. And, many of the companies owned by Carlyle we admire and apparently they admire many of the companies we own. In addition, Carlyle has an elite fund raising capability. Led by David Rubenstein, the investor relations team has built a global infrastructure that has resulted in 1,400 investors in 72 countries. David and his team spend most of the year traversing the globe to meet with all clients and assist them in finding the appropriate investment strategy for their current needs. Finally, the massive number of funds and diversity of products should create a more stable incentive income revenue stream than many of its rivals. While this performance fee revenue is unlikely to garner as high a multiple as management fee earnings, the stability achieved through diversification makes it more valuable to Carlyle shareholders than the performance fee earnings achieved at many of the company's peers. We also believe the management fee margins should grow as the investment infrastructure has been built to handle a much larger asset base. (Michael Baron)
The Carlyle Group (CG, Financial) is one of the largest diversified alternative asset managers with nearly $150 billion in client assets. Alternative asset managers continue to gain share within the investment management industry as investors seek above market returns with less volatility than traditional equity markets. Additionally, these flows have increasingly migrated towards the few elite alternative firms including Carlyle and away from the perceived more riskier upstarts. We expect this combination to continue to be a tailwind for Carlyle's asset accumulation. Further, Carlyle distinguishes itself from the other elite alternative managers by its investment portfolios that are more diversified across disciplines and geography. This deep range of products enables Carlyle to achieve a greater share of client's wallet than competitors. Nearly 60% of its investors hold more than six distinct Carlyle products. And, many of the companies owned by Carlyle we admire and apparently they admire many of the companies we own. In addition, Carlyle has an elite fund raising capability. Led by David Rubenstein, the investor relations team has built a global infrastructure that has resulted in 1,400 investors in 72 countries. David and his team spend most of the year traversing the globe to meet with all clients and assist them in finding the appropriate investment strategy for their current needs. Finally, the massive number of funds and diversity of products should create a more stable incentive income revenue stream than many of its rivals. While this performance fee revenue is unlikely to garner as high a multiple as management fee earnings, the stability achieved through diversification makes it more valuable to Carlyle shareholders than the performance fee earnings achieved at many of the company's peers. We also believe the management fee margins should grow as the investment infrastructure has been built to handle a much larger asset base. (Michael Baron)
