10 Best Asset Management Stocks To Buy According To Hedge Funds

In this article, we discuss 10 best asset management stocks to buy according to hedge funds.

Although many countries recovered from the COVID-19 pandemic in 2022, the global economy faced challenges due to the war in Ukraine and rising inflation, which many economies were attempting to control. In Hong Kong, Covid-related restrictions continued to limit normal business operations. Given the market volatility in 2022, it’s not unexpected that the asset management sector faced a challenging year, with all types of assets experiencing losses. 

The asset management sector outlook is looking positive, as per KPMG’s latest report on the asset management and private equity sector in 2023. Hong Kong is gradually returning to normal business operations as Covid restrictions are lifted, and the easing of restrictions in mainland China has removed a significant obstacle to asset management activity, particularly in private equity. Despite ongoing geopolitical and economic uncertainty, there is a general expectation that there will be a return to relative normality in the latter part of 2023, assuming no further global shocks. The asset management sector in Hong Kong and Asia has tremendous potential for growth, with the number of asset managers in the city doubling in the 10 years up to 2021, according to the Securities and Futures Commission.

Per Deloitte’s Investment Management Outlook as of October 2022, open-ended funds remained the preferred investment choice, but only about 20% outperformed the broader US equity composite on an absolute return basis in the one-year period up to 2021. Private capital investments, which include private equity, venture capital, real estate, private debt, real assets, and fund of funds, outperformed hedge funds globally, with a return of 39.7% compared to 10.2% for hedge funds in 2021. The consolidation of the industry showed signs of slowing down, with a decline in M&A activity in Q2 2022 compared to Q2 2021. In 2023, some investment management firms may focus on integrating previously closed acquisitions to maximize synergies and transform operations as potential deals move to the back burner.

The asset and wealth management industry is facing significant changes due to various challenges such as fee pressure, increased costs, and changing investor preferences. These challenges are further compounded by market volatility, rising interest rates and inflation, and looming economic downturns. However, the industry’s underlying fundamentals remain strong, with the potential for attractive profitability. Additionally, there has been a growing interest in alternative investments, thematic investment needs, and digital engagement preferences. To benefit from the asset management sector, some of the best stocks investors can buy include Apollo Global Management, Inc. (NYSE:APO), Blackstone Inc. (NYSE:BX), and BlackRock, Inc. (NYSE:BLK). 

Our Methodology 

We scanned Insider Monkey’s database of 943 hedge funds and picked the top 10 companies that provide services in the asset management sector with the highest number of hedge fund investors. These are the best asset management stocks to buy according to hedge funds.

Best Asset Management Stocks To Buy According To Hedge Funds 

10. Brookfield Asset Management Ltd. (NYSE:BAM)

Number of Hedge Fund Holders: 28

Brookfield Asset Management Ltd. (NYSE:BAM) provides alternative asset management services. Its renewable power and transition business includes the ownership, operation, and development of hydroelectric, wind, solar, and energy transition power generating assets. The company’s private equity segment offers infrastructure, industrial, real estate, and land development services. In Q4 2022, Brookfield Asset Management Ltd.’s Q4 distributable EPS of $0.35 topped the $0.32 consensus. Total assets under management were $790 billion at December 31, 2022, up 15% from a year ago.

On February 9, RBC Capital analyst Geoffrey Kwan raised the firm’s price target on Brookfield Asset Management Ltd. to $40 from $35 and kept an Outperform rating on the shares. The firm further noted that Brookfield Asset Management Ltd. is among its top 3 best ideas for 2023 in this sector, citing its positive fundamentals, potential catalysts, and some defensive attributes. 

According to Insider Monkey’s fourth quarter database, 28 hedge funds were bullish on Brookfield Asset Management Ltd., with collective stakes worth $292 million. 

In addition to Apollo Global Management, Inc., Blackstone Inc., and BlackRock, Inc., Brookfield Asset Management Ltd. is one of the best asset management stocks to invest in. 

SaltLight Capital Management made the following comment about Brookfield Asset Management Ltd. in its Q4 2022 investor letter:

“Brookfield Asset Management Ltd. completed the spin-off transaction that we’ve been talking about for much of 2023. We now own a meaningful position in their ‘asset heavy’ called Brookfield Corporation which comprises real assets such as infrastructure, property, renewables, and private equity-related investment into these sectors.

Their asset management business has been spun off into a capital-light pure play asset manager where we participate in their fees and carry in their underlying funds.

The transaction has yet to show any unlock of value. It’s too early to tell but at the sum of the parts level, we believe it is highly undervalued.”

9. T. Rowe Price Group, Inc. (NASDAQ:TROW)

Number of Hedge Fund Holders: 29

Rowe Price Group, Inc. (NASDAQ:TROW) is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. On April 13, T. Rowe Price Group, Inc. reported a 2.3% month-over-month growth in its preliminary assets under management for March 2023.Month-end AUM came in at $1.34 trillion, up from $1.31 trillion in February 2023. It is one of the best asset management stocks to invest in. 

On April 14, Wells Fargo analyst Finian O’Shea raised the firm’s price target on T. Rowe Price Group, Inc. to $115 from $112 and reiterated an Equal Weight rating on the shares. March AUM was reported to be 2.8% higher than the firm previously estimated, the analyst wrote in a research note. Wells Fargo added that Q1 flows were “disappointing,” though some latest short-term fund performance improvement is positive.

According to Insider Monkey’s fourth quarter database, 29 hedge funds were bullish on T. Rowe Price Group, Inc., compared to 30 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the biggest stakeholder of the company, with 711,253 shares worth $77.5 million. 

8. Affiliated Managers Group, Inc. (NYSE:AMG)

Number of Hedge Fund Holders: 33

Affiliated Managers Group, Inc. (NYSE:AMG) is an investment management company that offers its services to mutual funds, institutional clients, and retail and high net worth individuals in the United States. It also provides advisory services to mutual funds. It is one of the top asset management stocks to watch. On February 14, Affiliated Managers Group, Inc. repurchased approximately $130 million in common stock, bringing full-year repurchases to $475 million. 

On April 5, BofA analyst Craig Siegenthaler lifted the firm’s price target on Affiliated Managers Group, Inc. to $192 from $182 and maintained a Neutral rating on the shares as part of a Q1 earnings preview note on traditional asset managers. 

According to Insider Monkey’s fourth quarter database, 33 hedge funds were bullish on Affiliated Managers Group, Inc., and John W. Rogers’ Ariel Investments is the biggest stakeholder of the company, with 1.12 million shares worth $178.75 million. 

Ariel Small/Mid Cap Value Strategy made the following comment about Affiliated Managers Group, Inc. in its Q4 2022 investor letter:

“Boutique asset manager, Affiliated Managers Group, Inc. also advanced in the quarter on robust earnings. While global equity and quantitative outflows continue to moderate, AMG is experiencing strong investment performance within the alternatives segment as well as generating higher performance fees across its diversified set of strategies. Looking ahead, management remains excited about its pipeline of new investments in secular growth areas such as private markets, dedicated ESG strategies, liquid alternatives and wealth management. Meanwhile, AMG continues to take advantage of the company’s low valuation, actively retiring 25% of AMG’s shares outstanding since 2019.”

7. Ares Management Corporation (NYSE:ARES)

Number of Hedge Fund Holders: 33

Ares Management Corporation (NYSE:ARES) is an alternative asset manager in the United States, Europe, and Asia. It operates through Tradable Credit Group, Direct Lending Group, Private Equity Group, and Real Estate Group segments. It is one of the best asset management stocks to invest in. 

On April 24, Ares Management Corporation announced the initiation of a new fund that will be dedicated to investing in loans to middle-market companies in the United States. The newly launched Ares Strategic Income Fund (ASIF) has an initial investable capital of approximately $1.5 billion. Its primary focus will be on investing in senior secured, floating-rate loans to middle-market companies in the US that have been directly originated.

Barclays maintained an Overweight rating on Ares Management Corporation on April 14 but reduced the price target on the shares from $99 to $98 prior to the Q1 results. The analyst anticipates that realized income for the alternative asset manager group will remain low and that fundraising may be delayed somewhat into Q2, especially following the recent banking crisis.

According to Insider Monkey’s fourth quarter database, 33 hedge funds were bullish on Ares Management Corporation, compared to 29 funds in the prior quarter. Mick Hellman’s HMI Capital is the biggest stakeholder of the company, with 3.8 million shares worth $261.3 million. 

Vulcan Value Partners made the following comment about Ares Management Corporation in its Q3 2022 investor letter:

“Ares Management Corporation, is a global, diversified alternative asset manager with a focus on credit and debt funds. Among alternative asset managers, Ares has a leading market share in credit products. These credit products generate fee-related revenue, which we believe translates to stable earnings power. Ares is benefiting from increasing investor demand for private credit assets. According to industry data, the gap between current and target allocations for institutions is wider for private credit than for private equity, implying that private credit has substantial opportunity for growth. Ares has generated strong historical returns in private credit and demand from private equity sponsors, who are Ares’s primary customers, for private credit funding has increased. This has resulted in market share gains for private credit against the banks and public markets, and we believe that trend will continue. We think that scale and relationships are Ares’ most important competitive advantages and, to the extent these advantages lead to strong returns, this should lead to continued growth in AUM. The alternative asset management space is very competitive, but we believe that Ares is well positioned.”

6. Ameriprise Financial, Inc. (NYSE:AMP)

Number of Hedge Fund Holders: 38

Ameriprise Financial, Inc. (NYSE:AMP) provides financial products and services to individual and institutional clients in the United States and internationally. It operates through four segments – Advice & Wealth Management, Asset Management, Retirement & Protection Solutions, and Corporate & Other. On April 24, Ameriprise Financial, Inc. declared a $1.35 per share quarterly dividend, an 8% increase from its prior dividend of $1.25. The dividend is payable on May 19, to shareholders of record on May 8. It is one of the best asset management stocks to invest in. 

On February 1, Credit Suisse analyst Andrew Kligerman raised the firm’s price target on Ameriprise Financial, Inc. to $401 from $382 and reiterated an Outperform rating on the shares, citing a better earnings outlook primarily supported by ongoing improving expectations for Ameriprise Financial, Inc.’s higher multiple Advice & Wealth Management business.

According to Insider Monkey’s fourth quarter database, 38 hedge funds were long Ameriprise Financial, Inc., compared to 35 funds in the prior quarter. Andreas Halvorsen’s Viking Global is the biggest stakeholder of the company, with 1.6 million shares worth $513 million. 

Like Apollo Global Management, Inc., Blackstone Inc., and BlackRock, Inc., Ameriprise Financial, Inc. is one of the premier asset management stocks to buy. 

Aristotle Value Equity Strategy made the following comment about Ameriprise Financial, Inc. in its Q4 2022 investor letter:

“Ameriprise Financial, Inc., the investment management firm, was a top contributor for the quarter. During our time as shareholders, Ameriprise has continued to execute on its transformation into an important player in the asset and wealth management industry (and away from insurance products). Today the Advice & Wealth Management segment, combined with the Asset Management segment, account for nearly 80% of the company’s revenues. This has served to de-risk its business model, unlock excess capital (of which it returned $632 million to shareholders during the quarter) and improve returns on equity, which are now in excess of 47%. In addition, the company takes pride in its ability to attract and retain financial advisors, providing them the tools to build relationships with clients. The market volatility during the year, in our view, has given ample opportunity for Ameriprise’s advisors to demonstrate the value their services can provide for clients.”

5. State Street Corporation (NYSE:STT)

Number of Hedge Fund Holders: 40

State Street Corporation (NYSE:STT) provides a range of financial products and services to institutional investors worldwide, including investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. 

On April 18, Barclays analyst Jason Goldberg maintained an Overweight rating on State Street Corporation but decreased the target price on the shares from $102 to $100. The analyst cited the company’s Q1 earnings, which were lower than expected due to lower net interest income and higher-than-anticipated provision, as the reason for the price target adjustment.

According to Insider Monkey’s fourth quarter database, 40 hedge funds were bullish on State Street Corporation, compared to 38 funds in the prior quarter. Harris Associates is the biggest stakeholder of the company, with 5.6 million shares worth $436.4 million. 

Oakmark Equity and Income Fund made the following comment about State Street Corporation in its Q1 2023 investor letter:

“The Oakmark Equity and Income Fund has 29% of its equity portfolio in financials. This made the March sell-off painful, but we do not believe that this has meaningfully changed the value of most of our financial equity holdings. In fact, we were adding to financial positions throughout March. We believe that one way to analyze our financial holdings is to look at them in different buckets given their various business models and risk profiles. Almost 30% of our financial exposure is in insurance companies and insurance brokers. Insurance companies have very stable liability profiles, so the main risk is a change in asset values. We are comfortable with their investment portfolios and think these stocks are quite attractive. Around 5% of our financials are asset managers. This leaves a little over 40% of the financials exposure in a varied group of banks and lenders. About 5% of that portfolio is in Bank of America and State Street Corporation. These two banks are designated as Systematically Important Financial Institutions and are held to higher regulatory standards. State Street is a trust bank that does very little lending, has significant excess capital, and should benefit from rising net interest income.”

4. BlackRock, Inc. (NYSE:BLK)

Number of Hedge Fund Holders: 49

BlackRock, Inc. is an investment manager that caters to a wide range of clients, including institutional, intermediary, and individual investors such as insurance companies, pension plans for corporations, unions and public sectors, endowments, governments, charities, mutual funds, corporations, banks, sovereign wealth funds, official institutions, and public institutions. In addition to investment management, BlackRock, Inc. also offers advisory services and global risk management solutions. It is one of the best asset management stocks to invest in. 

On April 17, Craig Siegenthaler, an analyst at BofA, increased the firm’s price target on BlackRock, Inc. from $868 to $920 and maintained a Buy rating on the stock. This is due to the company’s beating its earnings estimates and its Assets under Management increasing. In addition, stronger Q2 beta, higher operating margin and non-operating income contributed to the analyst’s decision to raise the firm’s Q2, 2024, and 2025 EPS estimates. He also raised the organic growth estimate for 2023/24, citing a higher conviction behind the rebalancing thesis and money market inflows following BlackRock, Inc.’s Q1 report.

According to Insider Monkey’s fourth quarter database, 49 hedge funds were bullish on BlackRock, Inc., compared to 46 funds in the prior quarter. Harris Associates held the largest stake in the company, with 787,188 shares worth $557.8 million. 

Baron FinTech Fund made the following comment about BlackRock, Inc. in its Q4 2022 investor letter:

“Shares of BlackRock, Inc., the world’s largest asset manager, increased during the quarter. Despite volatility and a mid-December decline, most equity markets finished higher in the quarter, and BlackRock, which is heavily tied to these markets, benefited. Additionally, investors are anticipating that the company’s fixed income products will experience growth in 2023. Alternative strategies are expanding as well and should continue to provide a profitable revenue stream.”

3. Blackstone Inc. (NYSE:BX)

Number of Hedge Fund Holders: 51

Blackstone Inc. is an alternative asset management company that focuses on real estate, private equity, hedge fund solutions, credit, secondary funds of funds, public debt and equity, and multi-asset class strategies. The company has a preference for investing in early-stage businesses. Additionally, Blackstone Inc. provides capital markets services. It is one of the best asset management stocks to watch. On April 20, the company announced that it will pay a $0.82 per share quarterly dividend on May 8, to shareholders of record on May 1. 

On April 21, Craig Siegenthaler, an analyst at BofA, increased the price target on Blackstone Inc. from $98 to $109 and maintained a Buy rating on the shares following the Q1 report. Despite a challenging fundraising environment, particularly for real estate debt and credit businesses, the firm expects Blackstone Inc. to raise more than $150 billion this year. BofA has also revised its EPS estimates for 2024 and 2025 upwards, primarily due to stronger fundraising.

According to Insider Monkey’s fourth quarter database, 51 hedge funds were long Blackstone Inc., compared to 61 funds in the last quarter. Thomas Steyer’s Farallon Capital is the biggest stakeholder of the company, with 3.2 million shares worth $241 million. 

Aristotle Value Equity Strategy made the following comment about Blackstone Inc. in its Q4 2022 investor letter:

“Blackstone Inc., one of the world’s largest alternative asset managers, was the leading detractor for the period. Shares of the company declined following the decision to limit withdrawals from its Blackstone Real Estate Income Trust (BREIT), which allows retail clients access to alternative investments (typically only available to institutions). While we will continue to study potential long-term impacts of this move, the monthly redemption limits are a mere 2% of the fund’s assets and, importantly, the structure of the fund is one of the reasons that attracted us to Blackstone. We believe lockup periods and redemption limits create stickier capital, while the evergreen nature of BREIT provides an edge over traditional alternative funds that require fundraising cycles. Just after quarter end, a large institution invested $4 billion in BREIT at current net asset value, providing what we view as a noteworthy endorsement of both the fund and firm as a whole. Moreover, we believe Blackstone’s track record of investment performance, as well as first-mover and distribution advantages, positions the firm well to further penetrate retail and private wealth channels.”

2. KKR & Co. Inc. (NYSE:KKR)

Number of Hedge Fund Holders: 57 

KKR & Co. Inc. invests in private equity and real estate, focusing on both direct and fund of fund investments. Their areas of expertise include buying out companies with borrowed funds, acquiring management control, investing in businesses at different stages of growth, as well as handling distressed or struggling investments in various markets. They invest in a wide range of markets, including the lower and middle market. It is one of the best asset management stocks to invest in. In Q4 2022, KKR & Co. Inc.’s assets under management rose to $503.9 billion from $496.2 billion in Q3 and from $470.6 billion a year before. 

On April 14, Benjamin Budish, an analyst at Barclays, maintained an Overweight rating on KKR & Co. Inc. but reduced the price target on the shares from $66 to $63 before the Q1 results. According to the analyst, the alternative asset manager group will continue to experience low levels of realized income, and fundraising could potentially be delayed until Q2, particularly due to the recent banking crisis.

According to Insider Monkey’s fourth quarter database, 57 hedge funds were long KKR & Co. Inc., compared to 59 funds in the prior quarter.

Greenhaven Road Capital made the following comment about KKR & Co. Inc. in its Q4 2022 investor letter:

“KKR & Co. Inc. – While some companies do investor days that are broadcast widely, KKR hosts a small group of investors for a Teach In and then quietly releases the deck on their website. The last one was in 2019, and the most recent one was on January 11th (link). Fair warning: the document is 145 pages long and goes into great detail. As for the themes I have been emphasizing, here are a few tidbits from the Teach In and how they fit into the framework.

Low Churn – $113B in “dry powder” (slide 6), capital that KKR is contractually guaranteed to receive from limited partners to invest. Perpetual Capital is 46% of fee-paying AUM (slide 111).

Secular Tailwinds – In addition to the continued allocations to private equity, KKR is increasingly penetrating Insurance and Private Wealth. The assets in these pools are ~4x the size of pension fund assets, which are the traditional private equity clients (slide 10 and 47)…” (Click here to read the full text)

1. Apollo Global Management, Inc. (NYSE:APO)

Number of Hedge Fund Holders: 64

Apollo Global Management, Inc. is a private equity firm that focuses on investing in credit, private equity, and real estate markets. The firm’s investments in private equity include a range of transactions such as traditional buyouts, recapitalizations, distressed buyouts, and debt investments. It is one of the best asset management stocks to buy. 

On April 14, Oppenheimer increased its price target on Apollo Global Management, Inc. to $79 from $73 and maintained an Outperform rating on the shares. The analyst believes that alternative asset managers like Apollo Global Management, Inc. are now seen as “bargains” following the collapse of SVB Financial. 

According to Insider Monkey’s fourth quarter database, 64 hedge funds were bullish on Apollo Global Management, Inc., compared to 65 funds in the prior quarter. 

Here is what Miller Value Partners Income Strategy has to say about Apollo Global Management, Inc. in its Q4 2021 investor letter:

“Apollo Global Management (APO) rose 18.4% during the quarter. The company reported Q3 distributable earnings (DE) of $1.71, well ahead of consensus of $1.10 and the quarterly dividend of $0.50/share (2.8% annualized yield). Fee-related earnings of $300M beat by 7% while realized net performance fees of $312M topped estimates by 23%. Total assets under management (AUM) of $481.1Bn and fee-earning AUM of $361.3Bn both rose +2% sequentially on the back of robust capital raising with $18.1Bn of inflows over the period. Additionally, Apollo hosted their 2021 Investor Day, outlining long-term financial targets including over $9/share in distributable earnings by 2026 (14% Compound Annual Growth Rate (CAGR) from $5.50 pro-forma 2022E) and fee-related earnings of $4.50-$4.75 (18% CAGR). Management expects to roughly double AUM by 2026 to $1trn from $481Bn currently with a 2.25x increase in fee-related revenues to $4.6Bn.”

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This article is originally published at Insider Monkey.