Core Insights - StepStone Group has initiated a new position in Chime Financial, acquiring 150,000 shares valued at approximately $3 million, representing 1.4% of the fund's reportable U.S. equity assets [2][3][7] - Chime Financial's shares are currently priced at $26.19, which is about 3% below their IPO price of $27 per share [4] - Chime Financial operates as a mobile-first fintech platform, providing fee-free banking services primarily to U.S. consumers earning under $100,000 per year [9][10] Financial Performance - Chime Financial reported a 29% year-over-year revenue increase to $544 million in the third quarter, with active members rising 21% to 9.1 million [12] - The company's gross margin held at 87%, and adjusted EBITDA turned positive at $29 million, indicating improving profitability metrics [12] - Management has raised full-year guidance and authorized a $200 million share repurchase program, reflecting confidence in the company's financial outlook [12] Investment Implications - StepStone's investment in Chime Financial is seen as a sign of growing confidence in the company's operating model, especially shortly after its IPO [11] - The position in Chime is relatively small compared to the fund's largest holdings, indicating a measured approach rather than high conviction [13] - Chime's appeal lies in its growing base of higher-income users, improving unit economics, and increasing monetization through new products [13]

Company Overview - Karman Holdings operates as a specialized provider of mission-critical systems and hardware for the aerospace and defense sector, focusing on high-performance solutions for applications in space, missile defense, and hypersonics [6] - The company reported a market capitalization of $9.1 billion and revenue of $428.2 million for the trailing twelve months (TTM), with a net income of $11.3 million [4] - Karman's latest quarter showed record revenue of $121.8 million, reflecting a 42% year-over-year increase, alongside adjusted EBITDA of $37.7 million and a 31% margin [10] Financial Position - StepStone Group acquired 292,428 shares of Karman Holdings, valued at approximately $21.11 million, making it the fund's second-largest disclosed U.S. equity holding [2][3] - This new position represents 9.9% of StepStone's 13F reportable assets under management [3] - Karman shares were priced at $68.44, more than tripling from the February IPO price of $22 per share [3] Business Strategy and Market Position - Karman generates revenue primarily through the sale of specialized aerospace and defense hardware, including payload protection systems and propulsion solutions, serving government agencies and defense contractors [8] - The company's funded backlog reached a record $758.2 million, up 31% since year-end, providing multi-year revenue coverage across missile defense, hypersonics, and space launch programs [10] - Karman's competitive edge lies in its integrated capabilities in design, manufacturing, and testing, which support advanced aerospace and defense initiatives [6] Investment Perspective - StepStone's investment in Karman highlights a strategy to gain exposure to defense and space spending, focusing on fundamentals rather than short-term market fluctuations [9] - Karman's demand is closely tied to government and defense budgets, making its earnings less sensitive to economic swings but reliant on execution and sustained federal spending [11] - Future returns for Karman will depend on backlog conversion and margin discipline rather than multiple expansion alone [11]

Core Insights - StepStone Group has made a significant investment in StubHub, acquiring nearly 7.6 million shares valued at approximately $127.3 million, which represents 59.9% of its reportable U.S. equity assets as of September 30 [2][3][10] Company Overview - StubHub is a leading technology platform in the secondary ticketing industry, facilitating transactions for sports, concerts, theater, and live events across more than 200 countries [6][9] - The company generates revenue primarily through transaction fees charged to buyers and sellers for each ticket sold on its platform [9] - As of the latest market close, StubHub's share price is $13.95, with a market capitalization of $5.1 billion and a revenue of $1.8 billion for the trailing twelve months (TTM) [4][6] Financial Performance - StubHub reported gross merchandise sales of $2.4 billion, an 11% increase year-over-year, with revenue rising 8% to $468 million [11] - Adjusted EBITDA increased by 21% to $67 million, with margins expanding to 14%, indicating improved operating leverage [11] - The company used IPO proceeds to reduce debt by approximately $750 million, lowering net leverage to 3.9 times trailing adjusted EBITDA, which strengthens its balance sheet [12] Market Position - StubHub's competitive advantage lies in its broad international reach and established brand, positioning it as a key player in the global event ticket resale market [6] - The secondary ticketing market is cyclical and sentiment-driven, but demand for live events has shown resilience even amid tightening discretionary spending [10]

Core Insights - The shift towards evergreen funds is expected to lead to allocations reaching up to 90% of total private asset investments in the next three to five years, driven by the removal of barriers such as high minimum commitments and long lock-up periods [1][3] - The introduction of new investment vehicles has made private market investments more flexible, transparent, and administratively efficient for wealth managers [2] Industry Trends - There is a significant increase in individual investors' appetite for private markets in Europe, particularly with the emergence of semi-liquid structures like ELTIF 2.0 [3] - Regulatory evolution, product innovation, and rising investor demand are converging to create new pathways for accessing private markets [3][4] Company Overview - StepStone Group manages $723 billion in total capital and is one of the largest private market investors globally, providing tailored portfolios across various asset classes to meet individual investor goals [4][5] - StepStone Private Wealth Solutions aims to address the generational shift in investment access, focusing on performance and practicality [5] Investment Strategies - The growing popularity of private credit, especially in direct lending, is highlighted as a compelling opportunity due to traditional banks retreating from the market [10] - StepStone emphasizes the importance of liquidity in product design, offering funds like SPRIM Lux with 5% quarterly liquidity to meet wealth investors' needs [7][8] Diversification and Risk Management - StepStone's approach to diversification includes access to over 100 general partners (GPs) and opportunities across various strategies, which helps mitigate risk [11][12] - The firm employs rigorous evaluation processes for investments, ensuring high-quality deal flow and reducing concentration risk [13][14] Technology and Future Outlook - Technology plays a crucial role in bridging gaps in alternative investments, with StepStone's SPI platform providing wealth managers access to critical data and investment opportunities [14] - The private markets sector is expected to continue evolving, with StepStone positioned to redefine how wealth clients engage with these markets, leveraging its institutional-grade platform [15]

Group 1: Federal Reserve and Market Impact - The impact of the Federal Reserve on markets is considered overrated, with the effects of interest rates being less predictable than commonly believed [1] Group 2: Private Equity and Fundraising - Private equity firms are actively hiring talent from Wall Street as fundraising competition intensifies, following a period of stagnation due to rising interest rates and market volatility [3] Group 3: Private Credit Benchmarks - Kroll and StepStone Group have launched private-credit benchmarks aimed at enhancing transparency and risk management for investors in the direct-lending market [4] Group 4: Investment Strategies and Derivative Income ETFs - Investors are advised to consider the implications of setting strike prices close to current prices when investing in derivative income ETFs, as this affects potential premiums and upside [5] Group 5: Private Investments in Defined Contribution Plans - Industry groups are urging the Department of Labor to provide guidance on including private and alternative investments in defined contribution plans [7] Group 6: Leadership Changes in Asset Management - Lazard Asset Management has appointed Chris Hogbin from AllianceBernstein as the new CEO, succeeding Evan Russo, who will transition to an advisory role [8] Group 7: Non-Traded REIT Guidelines - The NASAA has amended guidelines for non-traded real estate investment trusts to enhance protections for retail investors, with changes effective from January 1, 2026 [9] Group 8: ETF Inflows - U.S.-listed ETFs attracted $119.3 billion in August, marking the highest monthly total of 2025, with year-to-date inflows reaching $792.6 billion, on track to exceed $1 trillion for the second consecutive year [10]

Summary of StepStone Group Conference Call Company Overview - **Company**: StepStone Group - **Industry**: Private Markets Investment and Advisory - **Assets Under Management**: Approximately $190 billion, overseeing nearly $500 billion in private market allocations [3][4] Key Points and Arguments Business Model and Market Position - StepStone operates as a solution provider, differentiating itself from traditional General Partners (GPs) like Blackstone and KKR by allocating capital on behalf of clients to funds managed by GPs while also managing direct strategies [4][5] - The private markets have grown from approximately $2 trillion in assets under management (AUM) in 2007 to over $15 trillion today, indicating a significant market opportunity for solution providers [7][8] - StepStone's strategies include primary fund investments, co-investments, and secondary interests across four asset classes: private equity, venture capital, real estate, and private credit [6] Fundraising Success - Fiscal year 2025 was a record year for StepStone with total inflows of $30 billion, including $20 billion from separate accounts and $10 billion from commingled funds [10][11] - The company achieved a 90% re-up rate for managed accounts, with clients increasing their investments by an average of 30% upon re-upping [14][15] - The commingled fund side saw significant success, with over $3 billion raised across three different funds, marking the largest fundraising year for commingled funds since inception [12][13] Global Footprint and Client Base - Over 60% of StepStone's business comes from outside the U.S., allowing the firm to tap into growing allocations in emerging markets [11][24] - The firm aims to work with a diverse range of clients, from large sovereign wealth funds to individual investors, reflecting a solutions-oriented approach [9] Partnership with FTSE Russell - StepStone announced a partnership with FTSE Russell to develop private asset indices and analytics products, aiming to address the challenge of measuring performance across liquid and illiquid assets [17][20] - The partnership will initially focus on benchmarking solutions, with potential for investable products like index funds in the future [18][19] Macro Environment and Market Dynamics - The macroeconomic environment has been volatile, impacting fundraising and investment activity; however, StepStone's diversification across asset classes and geographies has mitigated some risks [22][24] - The secondary market has seen significant growth, with total secondary volume reaching approximately $160 billion in 2024, more than doubling in the last five to six years [33][34] Opportunities in Private Wealth and Institutional Markets - Private wealth management has seen substantial growth, with assets on the platform exceeding $8 billion, driven by a strong performance and efficient capital structures [40][42] - There is a growing interest in private credit and infrastructure as newer asset classes, with many institutional investors beginning to allocate to these areas [30][29] Future Outlook - StepStone is focused on expanding its international operations and product offerings, particularly in the private wealth channel and retirement markets [48][54] - The firm is exploring opportunities in public-private partnerships and the retirement channel, recognizing the potential for significant asset growth in these areas [50][53] Additional Important Insights - The firm has developed a comprehensive product suite for private wealth, catering to a wide range of investors and emphasizing a solutions-oriented approach [44][45] - The secondary market is expected to continue growing, driven by liquidity challenges faced by limited partners (LPs) and the increasing importance of secondary transactions [31][33] This summary encapsulates the key insights and developments discussed during the conference call, highlighting StepStone Group's strategic positioning, fundraising success, and future opportunities in the private markets landscape.