I can't help but think that when oil rebounds for real it will be fast and hard. The Middle East seems to be getting shakier by the day. Or it could be caused by under-production or any of a host of catalysts.
Yes. EPE is their second largest holding and oil seems to be looking for a bottom. Not the time to sell.
If marking investments to the market are a major cause of low earnings, that probably won't change much until future earnings reports. But it looks like a lot of really positive events are shaping up in other areas. It's nice to look at a high stock price, but it's meaningless unless you're looking to sell. Until then, the dividends are a nice incentive to be patient. Best of luck!
... and the hopeful club. The price of crude rebounded pretty well the last couple of days but APO did not respond. Guess the report was pretty bad in all sectors.
eighttrack4, GREAT POST! This company is involved in a myriad of businesses and industries and is not so easy to totally comprehend, but you seem to have a pretty good handle on it. If I understand it correctly, one of the main reasons for their earnings disappointment has to do with the major drop in oil prices, causing their energy investments to be marked to the market. As far as I'm concerned, these are some of the sharpest business minds available and I trust their judgement. Oil won't stay depressed forever and interest rates will eventually rise. Unless I'm completely confused, a lot of today's high P/E will be dramatically corrected when these things happen. I honestly believe that the current stock price is depressed and represents a tremendous buying opportunity for investors looking for an above average total return in a quality, well managed company.
To me it is ironic that in a quarter where Apollo successfully monetized their Athlon fracking play for 6x their investment (per Bloomberg) they're getting hit because ENI is weak due to energy investments. ENI is mark to market and bounces around. Their public investment in EP Energy is already up from the 12/31/14 mark. Furthermore, this energy weakness gives APO the ability to raise and invest their second Natural Resources fund, which is more important than any single mark.
The downside is that future distributions, in the near-term, look weak. Fund VI is in escrow (cannot distribute to shareholders until marks recover, for example.) Athene will go public but the date is unknown. Yet APO keeps investing and expanding (a variation of Athene will be replicated in Europe, it seems). Direct lending opportunities are huge. Management revenue, which the analysts prefer, keeps improving. Credit carry income was weak but that will recover sooner or later.
There is no near-term catalyst. But APO is a great business in an industry with tremendous economics and you're investing side by side with owner operators like Leon Black - who get practically all their income from APO distributions, just like you and me. Maybe this stocks doubles in 5 years, maybe it doubles in 3 years, maybe a catalyst appears and it goes up quicker. I don't see how you can lose in Apollo if your time horizon extends over a PE cycle rather that something short-term.