Apollo vs. KKR: How Much Should Investors Pay to Rely Less on Insurance?

Apollo looks cheaper than KKR on the earnings measures each company asks investors to follow. The discount comes with a choice: accept more exposure to insurance spreads, or pay more for a business whose recent growth leans harder on asset-management fees.

Apollo Global Management, Inc. (NYSE:APO) and KKR & Co. Inc. (NYSE:KKR) are credible alternatives for investors seeking private-market growth. Both manage investment capital and own insurance businesses. Their funding models and earnings mix mean that a large balance sheet is not automatically spare cash available to shareholders. Investors need to distinguish money supporting policyholders from profits that can support the public parent.

For a concrete example of why the financing structure matters, consider rival Blackstone’s role in Firmus. A $10 billion facility makes a striking headline; our analysis examines what belongs to the funds and what shareholders can actually infer for the manager.

Apollo’s discount comes with an identifiable risk

At the October 2 close of $114.02, Apollo traded at approximately 13.1 times its trailing adjusted net income of $8.69 per share. KKR’s $90.29 close represented about 16.3 times its $5.55 of trailing adjusted net income per share. Both denominators cover the four quarters through June. They exclude specified accounting items and are not GAAP earnings or guarantees of distributable cash.

The companies feature in our 10 Stocks With New Strategic Partnerships Investors Should Watch. Their participation in the AI financing effort adds an opportunity, but the investment case needs to work before proposed platforms become funded assets generating fees.

Apollo’s lower multiple is meaningful, but so is the source of its earnings. Its August 4 results showed June-quarter spread-related earnings of $877 million, exceeding fee-related earnings of $785 million. Insurance spread earnings depend on investment returns exceeding the cost of policyholder funding and other expenses. Growing the asset base helps only if underwriting and investment discipline protect that difference.

Fee-related earnings increased roughly 25% year over year, while spread-related earnings grew about 7%. Adjusted net income per share rose to $2.11 from $1.92. Apollo therefore offers a growing fee business alongside its insurance exposure; describing it as merely an insurer would miss a substantial part of the opportunity.

The bear case is that credit losses, funding costs or adverse policyholder behavior weaken spread earnings just as investors demand a larger discount for taking that risk. Consolidated cash cannot settle the concern because much of the balance sheet belongs to the insurance operation’s economics and obligations.

KKR’s fee growth deserves a closer look

KKR reported on July 30 that June-quarter fee-related earnings rose approximately 37% to $1.21 billion. Insurance operating earnings were much smaller at $288 million. That mix gives investors a more fee-heavy earnings base, though KKR still carries insurance and investment risks.

The quality of the growth matters. Management fees increased about 26%, but fee-related performance revenue jumped to $255 million from $54 million, partly reflecting a reporting reclassification. Performance-related revenue helped produce the exceptional headline increase. Investors should not assume every component will repeat at the same pace each quarter.

Adjusted net income reached $1.63 per share, compared with $1.18 a year earlier. KKR’s bull case is that fundraising and deployment keep expanding the fee base while insurance and investment realizations add earnings. Paying a higher multiple could be reasonable if that combination consistently grows per-share results faster than Apollo.

Its weakness is the price of that expectation. If performance fees normalize before management fees have grown enough to compensate, the premium becomes harder to defend. A healthy fundraising number also does not immediately equal fee income: capital must enter the relevant fee-paying arrangements on the terms investors were promised.

The cheaper stock gets the vote, conditionally

Insider Monkey’s database recorded 77 hedge fund holders for each company in Q2 2026 (June 30). Apollo fell from 81 holders in Q1 2026 (March 31) and KKR from 82. Tiger Global reduced its Apollo common-share position approximately 17.3% to 2.72 million shares; Akre Capital reduced KKR about 25.8% to 4.98 million. Those filings document positions at quarter-end, not reactions to later AI financing announcements.

September 15 short interest was about 23.57 million Apollo shares, 4.4% of reported float, versus 13.63 million KKR shares, 2.0%. Apollo’s higher short exposure reinforces the need to examine its risks, but does not establish why those positions were taken.

Apollo looks more attractive at these prices. Its approximately 19% discount to KKR’s adjusted earnings multiple compensates for some additional reliance on insurance while retaining meaningful fee growth. That preference requires stable insurance economics and disciplined credit exposure. KKR would make sense if its management-fee growth remained strong as performance fees normalized, while Apollo’s spread earnings weakened. The decision rests on recurring earnings per share, not on which manager attaches its name to the largest financing announcement.

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