Asset managers are firms that invest funds on behalf of others. In my view, for several reasons, it’s a good time to be an asset manager and to invest in asset managers. With interest rates on the way down, many more individuals and companies have become much more willing to buy stocks.
As a result, these entities are giving significantly more of their funds to asset managers to invest, boosting the managers’ financial results. And, since these asset managers usually get paid partly based on the performance of their investments, the stock market boom is quite positive for them.
Moreover, many of these asset managers invest in private companies which often launch IPOs or get acquired. The improvement of the stock market is going to entice many more companies to embark on lucrative IPOs. Also, the downward path of interest rates will enable additional firms to carry out highly profitable mergers and acquisitions. As a result of these trends, asset managers are likely to perform exceptionally well in 2924. Let’s look at three top asset manager stocks to buy now.
BlackRock (BLK)
BlackRock (NYSE:BLK) had an impressive $289 billion of net inflows last year, bringing its assets under management to a staggering $10 trillion.
Last quarter, its top line advanced 7% year over year (YOY), while its operating income climbed 11% YOY to $1.58 billion. Also, its operating margin came in at an impressive 34.2%.
Given America’s large investments in infrastructure and the huge infrastructure spending of most of the world’s governments that support the Energy Revolution, BlackRock’s acquisition of private-equity firm Global Infrastructure Partner, which “owns and operates” infrastructure projects, will be very profitable over the longer term.
BLK has an attractive forward price-earnings ratio of 20.9 times.
Berkshire Hathaway (BRK-B)
Warren Buffett’s company, Berkshire-Hathaway (NYSE:BRK-B), is not on any list of asset managers. But the firm does take insurance premiums, including premiums from whole life insurance policies, and invests them in stocks and other assets. That fundamentally makes Berkshire an asset management company.
Berkshire reported strong Q4 results as its operating revenue rose 28% YOY, and its operating income rose to $8.48 billion in Q4 from $6.63 billion in Q4 of 2022. Moreover, the firm is showing significant confidence in itself. It repurchased $2.2 billion of its own stock in Q4, up from $1.1 billion in the previous quarter.
Finally, Barron’s has forecast that Berkshire’s after-tax operating profits can increase to $40 billion in 2024. In December, the publication named BRK-B as one of its top ten picks for 2024.
Apollo Global Management (APO)
Apollo Global Management (NYSE:APO) is an “alternative asset manager” and has a robust private equity business.
On Feb. 28, JPMorgan started coverage of APO stock with an overweight rating. The firm thinks that the company is well-positioned to benefit from increases in the number of retirees and its strong investment returns.
Also noteworthy is that Goldman Sachs reported that APO is in the top ten holdings of 14 hedge funds, putting it in the top 30 stocks in that category.
Moreover, Investors Business Daily gives APO a high composite rating of 97 out of 99 and an accumulation/distribution grade of A-. This indicates that many institutional investors have been buying the name in the last 13 weeks.
Analysts, on average, expect APO’s earnings per share to climb to $7.78 this year and $9.08 next year from $6.74 in 2023.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
