Financial Data and Key Metrics Changes - The company reported GAAP net income for the quarter of $1.2 billion and distributable earnings of $1.9 billion, or $1.52 per common share, marking a 48% year-over-year increase [5][34] - Distributable earnings increased nearly 50% year on year, driven by a 26% growth in fee-related earnings and a more than doubling of net realizations [8][34] - Total assets under management (AUM) rose 12% year over year to $1.24 trillion, with fee-earning AUM growing 10% to $906 billion [32] Business Line Data and Key Metrics Changes - In corporate and real estate credit, AUM crossed the $500 billion milestone, up 18% year over year [19] - The infrastructure and asset-based credit business grew 29% year over year to $107 billion, one of the fastest-growing areas [20] - The private wealth channel's AUM grew 15% year over year to nearly $290 billion, with over $11 billion raised in the third quarter, more than doubling year over year [24][25] Market Data and Key Metrics Changes - The company executed three successful IPOs in the last three months, with a robust pipeline for the next 12 months [10][35] - The commercial real estate market is showing signs of recovery, with values bottoming in December 2023 and transaction activity increasing by 25% year over year in U.S. logistics [30] - The demand for data center space continues to grow, with a doubling in the leasing pipeline globally in Q3 compared to Q2 [63] Company Strategy and Development Direction - The company aims to capture generational shifts in the global economy and markets, focusing on massive capital solutions across various sectors, including AI, energy infrastructure, and life sciences [17] - The firm is positioned to lead the evolution of private credit markets, expanding from non-investment grade corporate credit to include commercial finance and infrastructure [20] - The company plans to broaden distribution in major markets and deepen its presence in key sub-channels, including the RIA channel [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the firm's growth prospects, citing strong structural tailwinds in the alternative sector and increasing allocations to alternatives by institutional investors [8][9] - The company anticipates a resurgence in capital markets activity, which should lead to greater realizations and support fundraising and deployment [10] - Despite recent credit defaults in the market, management emphasized that these events are not reflective of the private credit market and that defaults remain minimal [11][42] Other Important Information - The company celebrated its 40th anniversary, highlighting its growth from a startup to the largest alternative asset manager in the world [14] - The firm has achieved significant organic growth, distinguishing itself from competitors who often rely on acquisitions [14][15] Q&A Session Summary Question: Changes in credit quality across the portfolio - Management clarified that recent credit issues are not related to private credit but rather to bank-led credits, emphasizing minimal realized losses and strong credit quality [41][42] Question: Plans for the defined contribution business - Management discussed the importance of building capabilities in this area and indicated plans to work with existing partners while awaiting regulatory developments [44][45] Question: Brand strategy and marketing evolution - Management noted targeted marketing efforts, including a recent launch in Japan, and emphasized the importance of expanding the brand's footprint in private wealth [47][49] Question: Interplay between margin outlook and realizations - Management indicated that operating leverage will continue to support healthy fee-related earnings margins, with a favorable outlook for realizations as capital markets strengthen [52][53] Question: Feedback on BCRED's dividend cut - Management reported healthy gross sales and expected strong flows in BCRED, emphasizing the importance of delivering relative premium returns [68][78]

Market Sentiment - Current market sentiment shows a slowdown, but overall performance is close to record levels, indicating cautious optimism among investors [1][2] - Concerns differ between US and non-US investors, with US investors questioning the sustainability of US exceptionalism, while non-US investors are more focused on geopolitical issues [3] Investment Strategy - The company maintains a mildly pro-risk stance, remaining overweight in equities and constructive on the US market, advising clients not to pull back from US investments [4][5] - Clients are encouraged to diversify their portfolios beyond concentrated positions in US technology and healthcare sectors, exploring opportunities in private credit in Europe, private equity in Asia, and public equities in India and Japan [6][8] Retail Investor Activity - Retail investors are re-engaging with the market, as evidenced by significant movements in stocks like Beyond Meat and Krispy Kreme, although speculative trading may lead to volatility [9][10] Gold Market Insights - The company remains constructive on gold, viewing recent price drops as potential buying opportunities, with a year-end target of $4,900 per ounce, driven by structural demand from central banks [13][15] - The recent sell-off in gold is noted as the largest drop since 2013, highlighting the volatility in the market [14] Interest Rate Expectations - The company anticipates interest rate cuts from the Federal Reserve, expecting three cuts by the end of the year and two more in the following year, with current expectations for CPI at 3.1% [16][18]

Core Viewpoint - The private equity sector, particularly firms like Blackstone and Apollo, is experiencing a reduction in price targets but remains favored for long-term investment despite recent market challenges [1][4][6]. Group 1: Company Performance - Evercore has lowered price targets for Blackstone from 197 to 180 and for Apollo from 160 to 145, while maintaining an outperform rating for both [1]. - Blackstone is set to report earnings soon, which may influence market sentiment [1]. - Apollo's stock has shown a rebound of approximately 3.5% recently, while other firms like Aries and Blue Owl have also seen gains [11]. Group 2: Market Trends - The alternative investment space, including private equity and private credit, is gaining traction as more advisors allocate investor funds into these products [2][4]. - The financial sector has underperformed in October, with healthcare up 5% and financials down 2%, indicating a shift towards quality investments [5][6]. - There is a growing interest in private infrastructure investments due to funding shortages in government and municipalities, suggesting a new avenue for private equity firms [7][8]. Group 3: Competitive Landscape - The private equity market is becoming increasingly competitive, with a notable auction receiving 36 bids, highlighting the intense interest in this sector [9]. - The IPO market for traditional manufacturing companies, typically owned by private equity firms, has not yet opened, posing a challenge for these firms [10].

Market Resilience & Economic Outlook - The market has shown resilience despite fears and earnings revisions, experiencing a V-shaped recovery after a 3% drop [1][2] - Tariff concerns are quickly absorbed by the markets and are not expected to derail the current trajectory [2] - Strong corporate earnings contribute to market resilience, even amidst skepticism about CPI numbers due to government shutdowns [3] - The market is engaged in a "juggling act," balancing strong earnings with concerns about economic data [3] - Concerns on the edges of the market are healthy, preventing a straight "rocket ship up" scenario and fostering a two-way conversation [6] Investment Strategy & Portfolio Allocation - A balanced portfolio, including alternative investments, is recommended for clients [4] - Alternative investments are crucial for protection in a down market, offering safe interest, low volatility, and absolute returns [14] - A sample allocation package includes 40-45% equities, 30-40% fixed income, and 25-35% alternative investments [14] - Focus is on market-neutral, uncorrelated asset classes within alternatives, targeting 4-6% volatility and 5-7% coupon [15] Technology & AI - AI is considered a potential global revolution, comparable to infrastructure developments like railroads, and is still in its early stages [5] - Companies are investing heavily in capex to stay ahead in AI, which may temporarily affect earnings but is seen as necessary for growth [11][12] Tech Earnings & Market Dynamics - Tech earnings expectations are relatively high, and the margin of beat may be lower than before [8] - Dispersion within the Mag 7 stocks is healthy, with some stocks up significantly while others are relatively flat year-to-date [8] - A 3% pullback in the market, despite challenges, indicates resilience but also suggests a lack of a significant reset [10] - Strong earnings and ongoing capex spending suggest positive market prospects for the next 6-12 months [12]

Core Insights - AlphaCore Wealth Advisory has acquired SPC Financial, expanding its assets under management to over $8.5 billion and increasing its workforce to 100 employees [2][5][8] Company Overview - AlphaCore Wealth Advisory, based in La Jolla, California, manages $6 billion in assets and focuses on alternative investments [1][6] - SPC Financial, located in Rockville, Maryland, has $1.5 billion in assets and serves over 2,000 families in the Washington, D.C. area [2][4] Acquisition Details - The acquisition of SPC Financial includes eight financial advisors and 28 additional staff members, enhancing AlphaCore's East Coast presence [2] - The deal is expected to close in the fourth quarter of 2023 [2] Historical Context - SPC Financial was founded in 1970 and was affiliated with Raymond James Financial Services for 41 years before becoming a standalone RIA in 2024 [3] - The firm specializes in integrating tax and estate planning into financial planning and portfolio management [4] Strategic Focus - AlphaCore emphasizes alternative investments as a key differentiator in its asset allocation strategy, alongside traditional asset management and financial planning services [6] - The firm aims to cultivate a community of clients and professionals who share its vision for the future of wealth management [8]

Market Imbalance - Tech sector constitutes 35% of the S&P 500, marking a 50-year high [3] - Defensive sectors (staples, healthcare, utilities, and energy) represent only 19% of the S&P 500, a 35-year low [3] - Investors' exposure to tech stocks is at an all-time high [4] Alternative Investments - Investors are exploring alternatives like gold, Bitcoin, and cash to address the imbalance [4] - Cash offers a 4% return with no volatility [4] - Gold is exhibiting the best trend in the investable universe [4] - Crypto assets are attracting investors seeking exposure and potential uncorrelation with the tech sector [5] ETF Trends - Investors are increasingly allocating funds into alternative asset ETFs [5] - Leveraged ETFs and alternative investments are gaining attention [6]

Investment Opportunities in Gold and Alternative Assets - Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, combining tax advantages with the protective benefits of gold investment, making it attractive for hedging against economic uncertainties [1] - The price of gold has surged past $4,000 per ounce, driven by investor enthusiasm, indicating a strong demand for gold as an asset [2] - Historically, gold has served as a hedge against inflation and market volatility, with 45% of wealthy young investors owning gold as a physical asset and another 45% interested in it [3] Shift in Investment Preferences Among Younger Investors - A younger generation is showing a preference for alternative investments outside the traditional stock market, with 93% of wealthy young Americans planning to allocate more of their portfolios to alternatives in the coming years [3][4] - More than 72% of younger investors believe achieving above-average returns solely through traditional stocks and bonds is no longer possible, leading to increased interest in art as an alternative investment [6] - Fine art has historically outperformed the S&P 500, with contemporary art achieving an annual return of 11.5% from 1995 to 2023, compared to the S&P 500's 9.6% during the same period [7] Real Estate as a Growing Investment Sector - Real estate is viewed as a solid portfolio hedge, with 31% of younger investors identifying it as presenting the greatest opportunities for growth [10] - High-net-worth individuals hold over $6 trillion in real estate assets, indicating significant wealth concentration in this sector [10] - New investment platforms are making it easier for both accredited and non-accredited investors to access real estate markets, with options like fractional shares in commercial properties and residential home equity investments [11][12][13] Cryptocurrency's Mainstream Acceptance - Cryptocurrency has gained mainstream acceptance, with a global market cap of $3.68 trillion, driven by interest from wealthy millennials and Gen Z [16] - In a Bank of America survey, 29% of younger investors identified cryptocurrencies as offering the greatest opportunities for growth, compared to only 7% of older investors [17] - Wealthy young Americans allocate 15% of their portfolios to crypto, significantly higher than the 2% allocation by older generations [17]

Fundraising - Patria Investments secured $2.9 billion to invest in Latin American infrastructure [1] - This represents Patria Investments' largest fundraising effort for the infrastructure asset class [1] Investment Focus - The raised capital will be allocated to infrastructure projects within Latin America [1]

Market Overview - Major averages are down, with the VIX reaching its highest level since May and the 10-year yield dipping below 4% [1] - The Russell 2000 index has decreased by approximately 2% due to concerns regarding bad loans in the banking sector [1] Economic Conditions - There are clear liquidity problems in the economy, although they are not large, and the Federal Reserve has been conducting quantitative tightening (QT) for some time [2] - The Federal Reserve is expected to ease monetary policy in October and December, which could provide support to the economy [3] - The real economy showed good growth in Q2, and the third quarter appears healthy, although the ongoing government shutdown may reduce fourth-quarter growth by about 0.25 percentage points [4] Banking Sector Insights - Potential balance sheet issues may arise for small and regional banks, but the Fed is anticipated to establish facilities to provide necessary liquidity [5] - The growth of credit in non-traditional markets has been significant over the past decade, with digital markets expanding rapidly [6] Investment Opportunities - The rise of alternative credit sources is viewed as an opportunity rather than a concern, potentially providing more liquidity [8] - The alternatives market, including gold and hedge funds, is favored for cautious investors, especially as the economy may be slowing [9][10] - The private markets, particularly private credit, are also seen as attractive investment options [10] International Focus - China is highlighted as a key market due to the closing of the multiple spread between the US and China, which historically leads to rebounds in the Chinese market [11] - Significant investments in the technology sector in China are expected to create opportunities, particularly in new technologies and scientific advancements [12]

Core Insights - Wirehouses experienced year-over-year revenue increases in Q3, with major banks surpassing earnings estimates [1] - Merrill's wealth division reported $6.3 billion in revenue and $3.9 billion in asset management fees, reflecting increases of 10% and 12% year-over-year [2] - Morgan Stanley's total client assets reached $8.9 trillion, up from $7.7 trillion, moving closer to a target of $10 trillion [6] Merrill's Performance - Merrill added approximately 5,400 net new relationships in Q3, with 79% of these having assets over $500,000 [2] - The firm has seen a more than double increase in households with alternative investments over the past five years, with a 12% rise in advisor adoption since Q2 2024 [3] Alternative Investments and Cryptocurrency - Merrill's focus on alternative investments includes exploring sports franchises as a potential entry point for clients [3] - The firm is actively offering clients access to cryptocurrency ETFs, with products approved for wealthy clients since February 2024 [4] - Predictions suggest that by the end of 2025, all four major wirehouses will facilitate easy access to Bitcoin ETFs for advisors [5] Morgan Stanley's Financial Outlook - Morgan Stanley's CFO indicated a potential modest sequential gain in net interest income for Q4, despite expected Federal Reserve rate cuts [7] - The firm is attracting assets through fee-based flows, not solely relying on net new assets [7]