US-Based Alternative Asset Managers: Share Values Tank on Tariff-Induced Equity Market Rout

The share prices of US-based alternative asset managers—like Blackstone BX and KKR KKR —are down more than 10% on average April 3 as the markets react negatively to the Donald Trump administration’s global tariffs. While this has made some of the names we cover more approachable, we remain cautious.

Why it matters: With short-term rate cuts likely on pause in the near term and the equity markets baking in an economic slowdown, if not recession, due to the tariffs and cuts to US government spending and jobs, major headwinds have been put up for US-based alternative asset managers.

• Increased uncertainty and volatility in the equity markets tied to fiscal, tariff, and monetary policies, as well as concerns about economic growth, will stymie the pace and magnitude of improvements in fundraising, deployment, and harvesting activity for the group.
• Given these headwinds, revenue for the alternative asset managers will likely fall off this year. While much of these firms’ compensation structure is variable, their models still have a fair amount of base compensation and other fixed costs.

The bottom line: As of midday April 3, the alternative asset managers we track—Blackstone, Apollo, KKR, Carlyle, and Ares—were trading at an average price/fair value multiple of 0.85, making them modestly undervalued. That said, we’d prefer to see a slightly wider margin of safety before recommending any firm.

• Narrow-moat Blackstone is our top pick for long-term investors, given its scale and its broadly diversified portfolio of alternative products. Currently trading at a 13% discount to our fair value estimate, it has become more approachable, but we’d prefer to see that discount exceed 20%.
• While narrow-moat-rated KKR and Carlyle Group look more attractive, trading at 20% discounts to our fair value estimates, we remain cautious, with KKR heavily invested in its own funds and half its balance sheet tied to its life insurance arm, while Carlyle lacks the scale to be truly competitive.