Credit Fears Make These Alternative Asset Manager Stocks a Buy, Goldman Says

Credit fears could create buying opportunities in the stocks of alternative asset managers. (Paul Yeung/Bloomberg)

Key Points

• Concerns about bad loans have impacted alternative asset manager stocks, with Apollo down 13%, Ares 18%, and Blue Owl nearly 30% this year.
• Goldman Sachs suggests a buying opportunity for these stocks, noting current private credit non-performing loans are 1%, below historical peaks.
• Despite recent declines, these stocks still trade at high multiples, with Ares at over 24 times forward earnings, up from 17 times three years ago.

Worries about bad loans have clipped the wings of once-highflying alternative asset manager stocks. Those fears could provide a buying opportunity for names like Apollo Global Management, Ares Management, and Blue Owl Capital , according to Goldman Sachs.

A string of high-profile bankruptcies, including auto industry players First Brands and Tricolor, have spooked credit markets. The issue gained additional traction last week when JPMorgan CEO Jamie Dimon warned, “When you see one cockroach, there are probably more.”

Those fears are one factor that’s been weighing on stocks of alternative asset managers that have large exposure to private credit. Shares of Apollo are down 13% so far this year, those of Ares have declined about 18% and Blue Owl’s are down nearly 30%.

It could be a buy-the-dip moment, according to Goldman Sachs. The investment bank, which has Buy ratings on Apollo and Ares, and a Neutral rating for Blue Owl, says the risk-and-reward equation for all three stocks looks “increasingly compelling.”

It’s true the recent bankruptcies have made headlines. And financial contagions have a way of spreading in unpredictable ways. Still, Goldman notes, so far credit problems are tied to loans syndicated by traditional banks, not lenders associated with the private credit space.

While a weakening economy could lead to more private credit defaults, Goldman argues that, so far, these appear well within historical norms. The share of private credit loans that aren’t performing currently stands at about 1%, according to the bank. That compares to peaks of 3% to 4% during recent years’ market downturns and a high of 7% to 8% during the global financial crisis.

Of course, even if defaults don’t materialize asset manager stocks could still get hit if fearful fund investors yank their dollars from private credit funds, eroding the base of assets against which managers can charge fees. Still, Goldman notes, institutional private credit funds are protected by long holding periods designed to curtail just such a flight. Even retail funds typically limit quarterly withdrawals to 5% of assets.

Previous rough patches haven’t put much of a dent in firms’ ability to steadily grow their fee income. “Private credit management fees for the space grew through every period of lower market returns and wider credit spreads, albeit the pace of growth could moderate,” Goldman wrote.

Given all that, what makes investors so skittish?

The stocks may simply be a victim of their own success. Stories about the growth of private credit, and the Trump administration’s plans to put private assets in 401(k)s has led investors to bid up shares off all three companies in recent years. All three are still handily outperforming the S&P 500 over the past three years, despite their travails in 2025.

That’s led to comparatively rich multiples. Even after the 2025 selloff Ares stock trades at more than 24 times forward earnings, up from just 17 times three years ago. Apollo’s forward P/E has climbed to 14 from 8 and Blue Owl’s to 17 from 14.

In other words, investors have recently gotten jittery because, with prices so high, there’s little room for error.

Write to Ian Salisbury at ian.salisbury@barrons.com