The world of private equity can be a bit intimidating for retail investors, as it’s an area of capital markets that doesn’t get much exposure in the media. A lot of this has to do with the fact that private equity funds are typically only available to accredited investors that are willing to invest $250,000 or more. That means the average retail investor does not have deep enough pockets to participate. With that said, there are several private equity stocks that investors can buy to take advantage of this complex and lucrative area of finance.
Private equity funds are focused on buying private businesses through leveraged buyout transactions with the goal of selling them later for a profit. Owning shares of these companies means that you can take advantage of the company’s expertise and profits over the long run without having to put up as much capital as you would if you were investing in the actual private equity funds. Many of these stocks have been extremely strong performers this year and could be in for more upside going forward given a favorable market environment. Let’s take a deeper look at 3 private equity stocks to buy now.
1. The Blackstone Group
The Blackstone Group (NYSE:) is a private equity stock that is up over 51% year-to-date and is without a doubt one of the finest options in the group to consider. It’s a leading global alternative asset manager and provider of financial advisory services that is thriving in a post-pandemic world. In , the company reported fee-related earnings of $741 million, up 58% year-over-year, and saw its total assets under management reach $648.8 billion, up 21% year-over-year. A low interest rate environment is clearly proving to be beneficial for private equity firms, and Blackstone should continue to receive heavy inflows as a result.
It’s also worth noting that Blackstone has $148.2 billion in dry powder to use should there be more opportunities to take advantage of as the economy continues to find its footing. Investors should also be interested in the dividend here, as Blackstone offers a 3.11% dividend yield at this time. The stock price is very close to passing the all-important $100 mark and is a high-quality name for any investor to consider adding at this time. Blackstone will report its Q2 earnings on July 22nd, which should be another strong catalyst for the stock to look out for.
2. Apollo Global Management
Success in private equity is all about identifying opportunities that the market is overlooking. That’s why Apollo Global Management (NYSE:) is such an intriguing company, as its contrarian investment philosophy has been known to yield some truly exceptional returns. The company uses a value-oriented approach for private equity, credit, and real estate and focuses on nine core industries in which the firm has significant knowledge and experience. This helps Apollo Global to avoid competing against the herd in buyout deals and high-yield and investment-grade credit.
Apollo Global Management had a great with record GAAP earnings of $2.81 per share and record fee-related earnings of $0.65 per share, up 26% year-over-year. The company’s private equity portfolio appreciated 22% during the quarter and the company also announced a merger with leading retirement services company Athene Holding (NYSE:) that should help Apollo Global capitalize in the rapidly growing retirement investment industry. The stock has rallied 23% year-to-date and offers investors a 3.32% dividend yield at this time.
3. The Carlyle Group
Finally, we have Carlyle Group (NASDAQ:), an alternative investment manager operating across three segments including corporate private equity, global credit, and investment solutions. This is one of the biggest private equity firms in the world and a business that is ready to capitalize on any potential depressed asset prices with plenty of capital. The Carlyle Group saw its total assets under management reach $260 billion in , up 20% year-over-year and had $75 billion in dry powder at the end of Q1 that could be deployed in the coming months. The company’s investment funds delivered their best quarter in the past decade in Q1 and it’s evident that management is operating at a high level.
What’s great about private equity stocks like The Carlyle Group is that tend to return a lot of cash to shareholders, which is another reason to consider adding shares. The stock currently offers investors a 2.07% dividend yield and has been in a very nice uptrend since last March. It’s up over 49% year-to-date and is a strong option for investors who are interested in exposure to private equity through stock.