5 Best Asset Management Stocks To Buy According To Hedge Funds

In this article, we discuss 5 best asset management stocks to buy according to hedge funds. If you want to see more stocks in this selection, check out 10 Best Asset Management Stocks To Buy According To Hedge Funds. 

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 (NYSE:STT) 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 (NYSE:STT), 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 (NYSE:STT) 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 (NYSE:STT). 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. (NYSE:BLK) 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. (NYSE:BLK) 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. (NYSE:BLK) 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. (NYSE:BLK)’s Q1 report.

According to Insider Monkey’s fourth quarter database, 49 hedge funds were bullish on BlackRock, Inc. (NYSE:BLK), 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. (NYSE:BLK) in its Q4 2022 investor letter:

“Shares of BlackRock, Inc. (NYSE:BLK), 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. (NYSE:BX) 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. (NYSE:BX) 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. (NYSE:BX) 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. (NYSE:BX) 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. (NYSE:BX), 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. (NYSE:BX) in its Q4 2022 investor letter:

“Blackstone Inc. (NYSE:BX), 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. (NYSE:KKR) 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. (NYSE:KKR)’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. (NYSE:KKR) 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. (NYSE:KKR), compared to 59 funds in the prior quarter.

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

“KKR & Co. Inc. (NYSE:KKR) – 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. (NYSE:APO) 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. (NYSE:APO) to $79 from $73 and maintained an Outperform rating on the shares. The analyst believes that alternative asset managers like Apollo Global Management, Inc. (NYSE:APO) 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. (NYSE:APO), compared to 65 funds in the prior quarter. 

Here is what Miller Value Partners Income Strategy has to say about Apollo Global Management, Inc. (NYSE:APO) 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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