Can Apollo's Inorganic Growth Efforts Make the Stock a Solid Pick?

Core Insights - Apollo Global Management (APO) is pursuing growth through an acquisition-driven strategy, focusing on inorganic expansion to enhance its assets under management (AUM) and diversify revenue streams [1][2][24] - The company aims to scale its total AUM to $1.5 trillion by 2029, with significant growth expected in its equity and private lending segments [8][12][13] Inorganic Growth Efforts - Apollo completed the acquisition of Bridge Investment Group Holdings Inc., which adds approximately $50 billion in assets and nearly doubles its real estate AUM to over $110 billion [4][5][11] - The acquisition is expected to enhance Apollo's fee-related earnings and strengthen its offerings for institutional and wealth clients [5][11] Strategic Partnerships - In May 2025, Apollo partnered with JPMorgan Chase and Goldman Sachs to increase liquidity in the private credit market, aiming to originate larger loans more quickly [6] - Strategic alliances with Citigroup and State Street were formed to broaden access to private credit and enhance retail distribution channels [7][10] Revenue Growth and Financial Goals - Apollo has shown strong organic growth, with total GAAP revenues experiencing a three-year CAGR of 63.7% through 2024 [9] - The company expects fee-related earnings to grow at an average annual rate of 20% by 2029, with spread-related earnings projected to grow at 10% [12] Capital Distribution and Shareholder Returns - As of June 30, 2025, Apollo had $2.4 billion in cash and cash equivalents, supporting its capital distribution activities, including a 10.9% increase in its quarterly dividend [14][15] - The company has a share repurchase program authorized for up to $3 billion, with $1.03 billion remaining as of June 30, 2025 [15] Price Performance and Estimates - Over the past year, APO shares have gained 24.1%, outperforming the industry and the S&P 500 Index [16] - The Zacks Consensus Estimate for Apollo's 2025 and 2026 sales indicates year-over-year growth of 18% and 19.4%, respectively [19] Final Thoughts - Apollo's combination of inorganic acquisitions and strong organic growth positions it as a significant player in alternative asset management and private credit [24] - The company's robust liquidity, disciplined capital management, and consistent dividends and share repurchases enhance its attractiveness for long-term investors [25]