Alternative Asset Managers in My Portfolio

I will start with my scorecard in alt managers’ stocks.

• The results are as of October 20, 2024.

• The positions are sorted by size with the biggest on top.

• Returns are posted in USD pre-tax and rounded to the nearest point.

• MOC stands for “multiples of capital” and is calculated excluding dividends.

• IRR includes dividends though they are not reinvested.

On Seeking Alpha, I published many articles on big alternative (“alt”) managers (aka private equity), including Brookfield Asset Management (BAM), Brookfield Corporation (BN), KKR (KKR), and Ares (ARES), in addition to those in the table. Please see my author’s page there.

Perhaps, some of my readers do not know who alternative asset managers are. In one of my articles, I explained the industry for newcomers. Please let me know if you cannot read it because of a paywall.

For this post, I would just mention that this a very promising industry as should be clear from my returns in the table. But beware - alt managers’ stocks are quite volatile. To invest, one should distinguish between different types of alt managers and the various risks they are exposed to.

Almost all stocks in the industry, with rare exceptions, have done well over many years. Besides the ones I hold, I am particularly partial to KKR and ARES.

For about 10 years, I held BN/BAM but sold about a year ago. The results were satisfactory but I was disappointed with the non-transparency of the company’s reporting. Since I do not see advantages in Brookfield vs. other big alt managers, I decided to avoid investing in Brookfield entities at all.

Three and a half years ago, Apollo merged with life insurer Athene and created a new business model - an asset-heavy combination of an insurer and an alt manager. This was when I bought the stock. KKR and later Brookfield cloned the model while other alt managers remained traditionally asset-light. So far, alternative asset managers have initiated combinations with life insurers, not the other way around.

However, one insurance company is trying to do it the other way, i.e. become an alt manager as well. This process is in such early innings that I did not list this company in my table though I hold it. It is British Legal & General (LGEN in London, LGGNF and LGGNY in the US) under new management.

Make no mistake: today’s LGEN is a pure insurer with a salivating 9.5% yield qualified for US tax purposes. CEO Antonio Simoes has been in charge since only Jan 1, 2024, and it is too early to see benefits from his strategy. But his intentions do not leave any doubts - he wants LGEN to become an alt manager for both internal and external assets in addition to insurance. I recently reviewed this development on Seeking Alpha.

If he is successful, within several years, LGEN stock might appreciate handsomely, perhaps even in line with alt managers in my table, in addition to this wonderful dividend. This is a big “if” but it makes the stock worth holding.