Apollo Global Management Inc

Apollo's indiscriminate sell-off on minimal software credit exposure created an attractive entry point. We believe that the current market dynamics, driven by AI-related investments, will favor companies like Apollo that are well-positioned to capitalize on these trends. The strong fundamentals we observed in Q2 suggest that Apollo is set to benefit from the ongoing technological revolution, particularly as resource scarcity becomes a defining constraint in the AI landscape.

Apollo Global Management’s chief economist, Torsten Slok, published a report in June showing no signs of rising profit margins outside of the seven large technology stocks: “this is ultimately what we are waiting for, because the value of AI companies today rests entirely on the promise that margins in the S&P 493 will eventually climb.”

In this quarter's letter, we have written about our new position in Apollo Global Management. The market has penalized Apollo for its complexity, underappreciated the durability of its growth, and lumped it in with peers exposed to a wave of private credit anxieties from which we believe Apollo is largely insulated. The convergence of private capital and life insurance is one of the most consequential and durable themes in financial services today, and Apollo is its most structurally advantaged operator due to the pioneering combination of its asset manager and captive life insurer.

Apollo Global Management is mentioned in the context of the private credit sector, which has been experiencing significant scrutiny and volatility. The letter discusses the broader implications of the private credit market and highlights concerns raised by various industry leaders regarding potential risks and bad practices. John Zito, co-president of Apollo Global Management, has been vocal about these issues, indicating a complex period ahead for the sector. However, there is no explicit bullish or bearish stance taken on Apollo Global Management itself.

Apollo Global Management reported a strong first quarter in 2026, achieving record fee-related earnings (FRE) of $728 million, a 30% year-over-year growth. This growth was driven by record quarterly fee-related revenue and margin expansion. The company also surpassed $1 trillion in total assets under management (AUM), reaching $1.03 trillion, with record inflows of $115 billion in the quarter. The combined strength of FRE and spread-related earnings (SRE) totaling $1.4 billion highlights Apollo's robust earnings streams and strategic growth execution.

We significantly increased our exposure to Apollo Global Management, as concerns around private-credit markets improved risk-reward profiles for both. Their long-duration capital enables them to weather the ups and downs, while their copious dry powder positions them to play offense. Alternative asset management remains a growth industry, and we believe we are acquiring these two best-in-class franchises at attractive prices.

We bought Apollo in 2021, at a time when we believed that the alternative asset manager sector was misunderstood and undervalued; when valuations for balance sheet heavy companies like Apollo and KKR were overly penalised; and when Apollo’s share price was suffering from the scandal surrounding former CEO Leon Black’s links to Jeffrey Epstein. Our thesis was that the market viewed the companies as levered plays on financial markets when, in fact, the bulk of their value resides in their high-quality, visible, recurring and predictable streams of fee-related earnings derived from management fees charged on long duration capital. We believe Apollo is the best placed of all its peers to capitalise on an opening up of the 401(k) market.