Apollo Global Management (NYSE: ), which is one of the largest players in private credit, despite strong inflows and record AUM last year, saw its stock go down significantly. The same happened with its peers like Blackstone (BX), Brookfield Asset Management (BAM) and KKR & Co. (KKR). And this is not caused by fundamentals but due to worries about the private credit market and, more recently, due to increased redemptions from investors from private credit funds.

In my opinion, these headwinds are not going to last for an extended period, and this decline in stock price creates an attractive opportunity to buy Apollo near its 52-week lows.

Investment Thesis

My conviction in Apollo comes from two things. First is that, for the most part, Apollo has been valued at lower multiples than its peers because its earnings mix was dominated by SRE (Spread-Related Earnings) rather than the Fee-Related Earnings, which are considered to be more predictable and sticky. But the important thing to note in Apollo’s case is that the earnings mix is changing.

If we look back at the past few years, FRE has gone up from 36.3% in 2023 to around 43% in 2025 of the total FRE & SRE mix, and this is a trend that I expect to continue. So, once we have an earnings mix that is dominated by FRE, I strongly believe that Apollo’s multiples will expand and be more in line with what we see with its peers.

Secondly, because of weak sentiment towards private credit, Apollo, which was already priced lower than its peers, now trades at even lower multiples. My projections suggest that Apollo’s stock is about 28% undervalued compared to its intrinsic value today, which provides us enough margin of safety to navigate through the short-term headwinds that the company is facing today.

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Valuation

At the current earnings mix (43% FRE & 57% SRE), the multiple is around 11.4x. Total SRE and FRE today is $9.50, and the current stock price is $108.42.

So, as the mix shifts more towards FRE, I think it is fair to expect that the multiples will expand, and Apollo will likely trade at a 17-19x multiple or higher. For our valuation, I’ll go with a 17x multiple, which I think would be quite reasonable for the company.

Even in the most conservative scenario for Apollo, where its Total FRE & SRE grows by 12% every year for the next five years, the fair value at an 18% discount rate is close to $125.

But if we look at our base scenario of $17.72 earnings in 2030 (13% yearly growth), the fair value at a 15% discount rate is closer to $150. Put another way, the stock is trading approximately 28% below its fair value according to our estimates.

FY2025 Results

For the full year 2025, Apollo’s Fee-Related Earnings increased by 23% compared to 2024. The FRE Margins were also stable at 56% for both years. Total Assets Under Management and Fee-Generating AUM also went up by 25% and reached $938 billion and $709 billion, respectively. For most metrics, Apollo delivered double-digit growth.

On the Spread Related Earnings side, the growth, however, was 4.2% with the Net Spread decreasing 15 basis points from 1.38% in 2024 to 1.23% in 2025. This compression could be attributed to the increased cost of funds, which went up by 31% YoY, and a 20% increase in interest and other financing costs.

Inflows & Dry Powder

Total inflows for Apollo in 2025 were $228 billion, originations totalled $309 billion, and total deployment was $386 billion. Year-end dry powder was $73 billion, of which $42 billion is for Private Credit and $30 billion is for Private Equity strategies.

All-in-all, I think it’s fair to say that 2025 was a really good year for Apollo. Despite widespread concerns, inflows were strong, and the business grew double-digits.

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What’s Next?

I think the headwinds that alternative asset managers are facing today with regard to private credit are short-term in nature and do not impact the sustainability and growth of the long-term business model. Not only that, I think that the Big 4 (Blackstone, Brookfield, KKR & Apollo) will actually benefit from consolidation in this space as smaller players will likely struggle to regain investor confidence and, as a result, raise more funds. It is also important to note that the Big 4 have a record dry powder at their disposal, and this decline in private credit valuation might actually allow them to buy out funds that might be fundamentally strong, but are going through sentiment problems at very low prices.

Secondly, as we are seeing increased spending on AI infrastructure, I strongly believe that lenders like Apollo will benefit tremendously from this boom. While some of the buildout is going to get funded through more conventional forms of debt like public market bonds, I see private credit playing a more prominent role in this buildout going forward. Apollo’s $3.5 billion deal with xAI in January is one such example, and I think we will continue to see more deals like this in future.

Risks

While I do believe that over time firms like Apollo will do just fine, the disruption caused by AI is indeed real, which has resulted in valuations of software companies plummeting significantly both in the public markets and those in Private funds. As a result, the Loan-to-Value numbers have gone up significantly, and this has resulted in considerable markdown on valuations and has caused concerns about many borrowers’ ability to pay back.

But I think it is also important to note that while some software companies might struggle to adapt and survive, not every company is created equal. Also, the seniority of the debt itself will affect the real impact of defaults on the lender, which varies from firm to firm and fund to fund.

If I talk about Apollo specifically, while ADS (Apollo Debt Solutions) has mid-teens exposure to software, it is “100% senior secured, first lien, no PIK, no ARR“. It is also important to put things into perspective. In the most recent earnings call, the company confirmed that its exposure to this segment is less than 2% of its total AUM, with less than 1% exposure on the Private Equity side and the Athene balance sheet, which means the actual exposure and impact on the overall business is way lower than what the market is expecting.

Apart from AI disruption, another risk that I see is increased competition from asset managers like BlackRock and firms like Morgan Stanley and Goldman Sachs, who are trying to increase their presence in the alternatives space, and will likely benefit from their scale and existing client base. But I think we need to keep in mind that the alternative markets are growing every year, and even with an increasing number of big players entering the market, there is enough room for Apollo to grow its AUM and achieve a 12-15% annual growth in the total FRE & SRE.

The Bottom Line

To sum up, I’d say that Apollo is an excellent business which, at present, is facing headwinds that, in my opinion, are short-term. Due to these headwinds, its valuation has come down significantly, and it has created a 28% gap between its current price and intrinsic value.

I assign Apollo a Strong Buy rating and a price target of $150. I think there is sufficient margin of safety to get through current headwinds, and the long-term growth prospects remain intact.

After the Q4 and FY2025 results announcement on Feb 25, the market responded quite positively, and the stock went up 35% the next day and almost reached $85. However, the sentiment started to erode again, and the stock now trades more than 6% below the price I initially recommended it at.

So, in this article, my goal is to analyze Sezzle’s fundamentals using its FY2025 results, and assess whether my original thesis still holds up and how I’m approaching this decline.

FY2025 Results

Before I get to factors that are putting downward pressure on the stock, let’s quickly discuss Sezzle’s performance for the full year 2025.

If we look at the top-line growth, Sezzle’s yearly revenues increased by 66.1% in 2025, 110 basis points higher than the company’s guided range of 60-65%. GMV (Gross Merchandise Volume) increased 55.1% from $2.54 billion to $3.94 billion.

Net income also went up by 69.5%, whereas adjusted net income almost doubled. Not only that, but the Adjusted EBITDA margins also improved from 32.7% in 2024 to 41.7% in 2025.

If we look at the expense side, the Transaction Expense as a % of GMV shrank from 2.0% in FY2024 to 1.7% in FY2025. Similarly, Net Interest Expense also decreased from 0.5% of GMV to 0.4%.

However, even though Provision for Credit Losses was down in Q425 (2.0% vs 2.8% in Q424), for the full year, there was a modest increase in provisions, and the percentage increased from 2.2% to 2.3%. But, it is important to note that it is still below the targeted range of 2.5% to 3%, and Sezzle’s higher take rate than its peers compensates for the higher provisions than its competitors.

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An often-ignored and underappreciated advantage

I was going through Sezzle’s 2025 10-K form, and I came across this section about DSIP, which I found quite interesting. So, one of the major costs for a company like Sezzle is the cost of funds, and reducing that cost benefits the bottom line tremendously. While yes, you could and should try to negotiate better terms with the lenders for a lower interest rate, Sezzle took it a step further, which is something that is not often talked about.

So, the company has a DSIP, which stands for Delayed Settlement Incentive Program. What it essentially does is that instead of merchants choosing to settle payments from Sezzle immediately, they have the choice to defer those settlements to a later date and get paid interest on the balance.

Now, for merchants, this is like having a high-yield savings account that pays between 4% to 4.5% interest with some ‘cap on withdrawals’ (up to 250k on demand per week) and for Sezzle, this is a low-cost source of funds compared to the line of credit, where the company has to pay around 11% interest.

In 2025, the DSIP balance was close to $42 million, where the company effectively paid 4.12% interest, whereas the balance of LoC was $141.3 million with about 600 basis points higher interest. In my opinion, Sezzle’s DSIP is a really smart way of reducing interest expenses while increasing access to funds, and if the company continues to scale this program, the bottom-line benefits will be significant, and this would give it an edge over its competitors, who, to the best of my knowledge, don’t have a similar program in place.

Stock Performance

While the market reaction to Sezzle’s FY2025 results was very positive and the stock went up significantly, the stock price has fallen considerably since then. I think it’s quite obvious that this has less to do with the actual fundamentals and more with the macroeconomic environment. The ongoing conflict with Iran has once again fueled worries about inflation and reduced the probabilities of rate cuts this year. Due to concerns about the weakening of the economy, the overall stock market is under pressure, with consumer-facing stocks like Sezzle taking an even bigger hit.

In my opinion, Sezzle’s fundamentals remain solid, which gives me the confidence to increase my position in the company, and that’s what I’ve been doing recently.

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Valuation

If we look at Sezzle’s valuation, then it is trading at a 17x multiple of its adjusted net income of $3.59 per share. On a forward basis, it is trading at just a 13x multiple. For a company that is guiding 25-30% top-line growth and about 31% growth in per-share adjusted income for 2026, I think the market is being overly skeptical in giving Sezzle such low multiples.

For our projections, I have taken management’s guided per-share adjusted income of $4.70 as the starting point. We’ll assume that the growth decelerates gradually during our five-year forecast period. At a multiple of 18x, which I sincerely believe is quite reasonable, our projection-end valuation is around $181.

Even at a very high discount-rate of 21%, the stock is trading 12% below its fair value. However, if we look at our mid-point discount rate of 15%, the gap between fair value and current price widens to around 32%. I think at current valuations, there is a lot of upside and enough compensation to hold through the volatility.

Looking Ahead

Sezzle recently announced that it is venturing into providing wireless services with Sezzle Mobile, and the likely logic behind this is the lower likelihood of a subscriber changing their cellular provider on a regular basis, and as a result, they will likely stick with Sezzle for longer and opt in for other services that the company provides. This, I think, is fair enough. However, I also think that Sezzle’s ability to convert Sezzle Mobile customers into Sezzle Anywhere or Sezzle Premium customers will considerably influence the overall impact this new venture would have on growth and profitability.

I think it’s also worth mentioning that Sezzle is planning to expand into longer-term lending in addition to pay-in-4 and pay-in-6. Even though there is no guarantee whether it will actually materialize or not, Sezzle’s 10K report does mention that the company is looking into getting its own ILC (industrial loan company) bank charter, which would be a structural shift for the company and open doors to more opportunities.

If we look at the overall direction in which Sezzle is heading, then it’s apparent that the company doesn’t just want to be a BNPL provider but rather a full-stack finance and budgeting platform that also provides features like price comparisons, receipt scanning, browser extensions, and agentic commerce in future.

Risks

I think the most prominent risk for Sezzle is the risk of delinquency rates increasing if the economy weakens. The geopolitical environment has created a lot of uncertainty currently, which is why most investors are looking skeptically at not just companies like Sezzle but also the broader market.

But it is also important to consider that the ‘loans’ that Sezzle provides are short-term in nature, and there is flexibility for the company to tighten its underwriting if it sees unfavourable developments in the market. While doing so will likely temper short-term growth, I think the longer-term story and attractiveness of the company remain intact.

The other risk that I see relates to regulations. I think as the BNPL industry continues to expand, we’ll see more regulatory scrutiny in the industry, which might lead to higher compliance costs and impact the way companies in this industry work.

The Bottom Line

To sum up, I’d say that Sezzle has one of the best profitability profiles in its space, but its stock is under a lot of pressure due to macroeconomic factors. The BNPL industry is still in its early phases, and as more consumers adopt this payment method, Sezzle will continue to benefit. There is also an opportunity in the B2B BNPL space, should the company decide to tap into it.

So, after careful consideration, I reiterate my Strong Buy rating for Sezzle. I like the direction the company is heading in, plus the valuation at these levels is highly attractive to deliver a solid payoff once the macro pressures fade.

Sentiment

Sentiment is a fickle thing. Sometimes, it seems the market is looking for everything to be good, and not asking enough questions about what isn't working or what to be worried about. Sometimes it seems the be opposite is true. The market is convinced things are bad and is so confident that something is wrong, that it can ignore good news and positive things that are happening. Most of the time, we're somewhere between these 2 ends of the spectrum.

- Scott Nuttal, co-CEO, KKR & Co

I love the way Scott has articulated his thoughts about market sentiment. If we look closely, this is exactly what is happening today. Businesses with excellent economics are getting hammered today for no other reason than weak sentiment. Last year, this happened to Alphabet ($GOOGL), and a year later, the stock has almost doubled.

I strongly believe that most opportunities today are created because of sentiment rather than an information gap. If you have done your due diligence, if you are confident about the business you are investing in, don’t let the market’s sentiment get in your way and distract you. As an investor, the goal is to find stocks that are down because of sentiment, whereas the underlying business is doing well.

Geopolitics

In the fullness of time, all geopolitical events pass... if you have good businesses in great places and keep compounding returns, you'll earn excellent long-term returns.

- Bruce Flatt, CEO, Brookfield

I agree with Bruce’s thoughts about geopolitics. In these past few years, geopolitics has seemed to have gotten really messy, which creates lots of uncertainty for investors. Just like Apollo’s Marc Rowan says, the balance has changed from 90% focus on investments and 10% on geopolitics to 30% on geopolitics and 70% on investments.

However, it is important to remember that eventually, this too shall pass. The goal is to be patient and keep adding businesses to your portfolio that are resilient and will emerge even stronger once the dust settles.

Value Investing

Value investors have faith that, one day, the stocks they are buying now for 50 cents on the dollar will trade at par. They also don't worry too much about how long it will take because they think par is a moving target and it's moving up. The payoff might come as a result of persistently good earnings that finally get noticed, or a sentiment shift, or a takeover. Whatever. The important thing is to get a full position before the price moves.

-Martin Braun

With so many posts on X or Reddit from people posting 100%, 200% or more gains in a realitively short periods, you might feel left behind, especially when you are just starting out. It might appear to you that the undervalued stock that you bought might stay undervalued forever, and you might be inclined to jump ship. But it’s important to be patient and keep building your position as the market will eventually recognize that undervalued opportunity and your payoff will be sizeable.

One such stock is Brookfield Asset Management (NYSE: BAM, TSX: BAM). If you haven’t heard about it before, I’ll introduce it briefly. So, BAM is an alternative asset manager, meaning it raises funds from institutions like pension funds, sovereign wealth funds, and high-net-worth individuals to invest in private credit and equity, and real assets like real estate, energy, and infrastructure.

The way BAM generates revenue is by charging base management fees on the funds that it manages and performance fees through carried interest, once a preset hurdle rate of return is crossed.

Now, even though the stock has fallen significantly over the past year, the underlying business is actually thriving, and this is the kind of opportunity that long-term investors wait for; fundamentals up, price down.

The Fundamentals

For the full year 2025, Fee-Related Earnings were up 28%, and Distributable Earnings were up 14%.

Despite the ‘scary headlines’ about private credit and equity, BAM had a strong fundraising year and raised $112 billion in 2025. Not only that, Dry powder, which is the capital that BAM can deploy, is now $134 billion.

In short, the fundamentals are consistently improving, whereas the stock price is failing to catch up due to overall negative sentiment towards the industry.

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The Dividend

After the most recent 15% hike, BAM now pays a quarterly dividend of $0.5025 / share or an annualized distribution of $2.01. At its current share price of $47.14, the dividend yield is 4.26%, which makes BAM an excellent addition to a passive income portfolio.

What makes the dividend even more attractive is the fact that it has been growing consistently since 2023. It has gone up from 32 cents to about 50 cents each quarter, representing a total increase of 56% in just three years and a CAGR of 16%. Plus, the management has been quite clear about its intention to keep increasing the dividend as the business continues to grow.

Payout Ratio

Brookfield’s management plans to distribute 90-95% of the distributable earnings of BAM as dividends to shareholders. Now, in most cases, I find such a high payout ratio to be quite unsettling because it could create a hindrance in future growth opportunities. However, since BAM is an asset-light business that doesn’t need much of its own capital to grow, I’m not concerned about the high payout ratio.

Since the payout ratio is a percentage of distributable earnings and the management expects to compound them annually at 15%, I’m quite confident about dividends growing at a similar pace.

Capital Appreciation

Now, just to make it clear, my goal isn’t to recommend you stocks with the highest yield, but stocks where I expect a stable, growing dividend, a safe payout ratio, plus the potential for capital appreciation. In BAM, I see all of these qualities. Yes, the stock has performed poorly over the past year, but if we zoom out a little bit, the stock is still up about 43% despite the recent slump. I’m pretty confident that once the private credit worries pull back and sentiment turns positive, BAM has significant upside.

Conclusion

Long story short, I strongly believe that BAM is an excellent business which continues to grow consistently. The stock price decline isn’t because of fundamental weakness within the company but due to the negative sentiment toward private markets, which is affecting all alternative asset managers today.

In my opinion, this sentiment-driven price movement is a solid buying opportunity where you get to lock in a 4.26% dividend yield plus the potential to compound capital at superior returns.

FY2025 Highlights

To begin with, the core highlights of 2025 results were EPS, which grew 33.15% YoY to $213.78, and per-share book value, which grew 20.5% from $1,059.60 in 2024 to $1,260.19. No doubt, both of these key metrics grew at an astounding rate. But there is more to the story.

While GPW (Gross premiums written) grew by 2.3% and NPW (Net premiums written) grew by 3.9% for the full year 2025, operating income from P&C insurance and reinsurance actually went down about 9%. And this decline could be attributed primarily to the decline in earnings from the Global insurers and reinsurers segment, and a decrease in the share of profit of associates.

There are two things that caused this decline in the share of profit of associates. First, there was a $64.7 million loss that the company had from the Waterous Energy Fund III, and second, Peak achievement, whose earnings were included in this segment for most of 2024, was consolidated for the year 2025, which means earnings from Peak achievement are now included in ‘Operating Income - Non-insurance companies’.

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I think it’s also important to mention that last year, the company had around $722 million in catastrophe losses from California wildfires, which ultimately affected operating earnings for the year.

Other than that, to Fairfax’s credit, the company managed its other insurance operating expenses really well, which were essentially flat year over year, and the combined ratio was 93% for the full year, a modest 30 basis point increase from 92.7% in 2024.

Interest and dividend income were also consistent with the 2024 numbers, which seem to strengthen management’s expectations to maintain this yield for the next few years. The composition of Fairfax’s fixed income portfolio is also quite reassuring, as shown in the picture below.

The Hidden Value

In 2025, Fairfax’s fair value excess over carrying value more than doubled compared to 2024, going up from $1.5 billion to $3.1 billion. Now, on a per-share basis, this would add around $148.6 (pre-tax) to the book value. But realistically, we need to factor in the taxes, since once the unrealized gains materialize, there will be tax liabilities as well.

So, for our calculation, we’ll assume a 21% tax rate (the actual rate for 2025 was 18%, and for 2024 was 24.4%).

As you can see from the calculations, we get an estimated after-tax addition of $117 to the per-share book value of $1260.19, which gives us an adjusted BVPS of $1377.19.

This means that the stock is trading at a relatively cheaper P/B multiple of 1.24x, compared to the 1.35x multiple that the actual BVPS gives us.

Valuation

Now, let’s look at Fairfax’s valuation from the Earnings per share perspective. We’ll use a normalized EPS using BVPS of $1260.19 and the average ROE of 15%, which leads us to an EPS of $189. We’ll use a 10x P/E multiple as that is a very reasonable multiple for a company like Fairfax, which has been consistently growing its book at an average rate of more than 15%.

Now, what stands out to me is that, even in the most conservative scenario of 9% EPS growth over the next five years and an 18% discount rate, the intrinsic value of $2,021 is still much higher than Fairfax’s current share price of $ 1,706.

If we look at a more pragmatic base-case scenario of 12% EPS growth and a 15% discount rate, the $2530 intrinsic value suggests that, at current price levels, there is more than 48% upside and a considerable margin of safety if things don’t go as planned for a while.

Share buybacks

As discussed in my previous article, Fairfax prefers to return capital to shareholders by buying back its shares opportunistically and only when such purchases are highly accretive, rather than buying back at any price, or increasing the dividend significantly.

Throughout 2025, Fairfax bought back more than 1 million shares at an average price of $1,615. Not only that, since the beginning of this year, the company has continued to buy back its shares at an average price of $1,684, and has bought more than 130k shares. This again supports our thesis that at current prices, Fairfax is undervalued and presents an excellent entry point for long-term investors.

Risks

There are a few risks that I believe my readers should be aware of with regard to Fairfax. Firstly, particularly in North America, the insurance market is softening, which means that going forward, we may see a pullback in premiums written to protect underwriting profits rather than chasing unprofitable growth. Even though management expects to maintain underwriting profits of $1.5 billion for the foreseeable future, the market conditions can put some pressure on the businesses. However, since its insurance businesses in other parts of the world seem to be doing really well, I think growth in other countries would offset lower premiums in North America.

Secondly, the company is still dealing with losses from the Life insurance and Run-off insurance, which were around $213 million in 2025 and $92 million in 2024. I was in Fairfax’s earnings call yesterday, and when management was asked about a realistic end to these losses, there was no clear outlook on when they would stop. I don’t blame the management for not providing an expiry date for these claims, as they are indeed highly unpredictable. So, these losses are something to keep an eye on for at least a few more years.

Looking Ahead

While I expect the GPW and NPW written numbers to be a bit soft, I’m confident in Fairfax’s ability to continue achieving underwriting profits of $1.5 billion or more, and a combined ratio below 95%.

In its portfolio, the company is betting heavily on Under Armour. This was apparent from Fairfax’s conference call yesterday, where the management seemed to have a lot of faith in the company’s turnaround, especially after the return of founder/CEO Kevin Plank.

Then there is also the acquisition of Kennedy Wilson, in which Fairfax is participating along with other parties, which is expected to close in Q2 2026. This deal will give Fairfax the majority economic interest for $1.65 billion funding commitment. I think it is important to mention that the company will be operated by the KW Management Group and William McMorrow, who is the current Chairman and CEO as well. I believe that this move will meaningfully contribute to Fairfax’s earnings in the years ahead while keeping the same executives to run the company.

The Bottom Line

To sum up, I’d say that the Q4 and FY2025 results have strengthened the case for a Strong Buy rating for the company. The EPS growth and consistent BVPS growth are extraordinary, but this strong performance doesn’t reflect in its valuation at all.

The company is trading at a considerable discount to its fair value based on my calculations, and there is more than enough margin of safety in the face of short-term headwinds. I would consider any non-company-specific pullbacks caused by sector-wide sentiment as an opportunity to add this company to the portfolio for long-term compounding.

I therefore maintain a STRONG BUY rating after the FY2025 results.

For the Fiscal Year 2025, revenues surpassed $400 billion for the first time, up 15% YoY. Net Income increased by 32%, while EPS increased by 34%. For a company of Alphabet’s size, this kind of double-digit growth is a remarkable feat indeed.

Revenues by Segment

Search & Other, and Subscriptions, Platforms & Devices revenues are up 17% YoY in Q4, YouTube Ad revenues are up 9%, and Google Cloud revenues are up a staggering 48% as well.

But not everything went up this quarter.

Revenues from Google Network Ads actually declined by 2% to $7.8 billion, down from $7.9 billion in Q4 2024. In my opinion, this decline likely comes from declining web traffic due to increased use of AI tools like ChatGPT and Gemini for search queries.

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Google Cloud

Nothing (apart from CapEx, of course!) grabbed more eyeballs than the Cloud revenues in yesterday’s announcement. Last year in Q4, Google Cloud brought in approximately $11.9 billion in revenues, whereas this quarter the number jumped to $17.6 billion, a 48% increase. The segment gets even more interesting when you factor in the $240 billion cloud backlog.

Not only that, in addition to accelerating revenues and growing backlog, Google improved operating margins in this segment from just under 18% to close to 30%.

CapEx Keeps Going Up

Everything comes at a cost, and for hyper-scalers like Google, Meta, and others, capital expenditures have been in focus for a while now. In Q4, the company’s CapEx nearly doubled from around $14 billion in Q4 2024 to more than $27 billion, for a full-year total of approximately $91 billion.

For the FY2026, Alphabet expects to spend $175b to $185b, nearly double the FY25 spending. This number surpassed the ~$120 billion mark that analysts expected from the company by a wide margin.

But, in my opinion, for a company that is sitting on a $240b cloud backlog, an increase in overall Ad revenues due to AI developments, the spending seems justified.

Is Google still worth buying?

Google is up ~72% in the last twelve months, and at the time of this writing, the stock is trading at approximately $331. Based on FY2025’s diluted EPS of $10.81, the stock currently trades at a 30.6x multiple, whereas it was trading at a 24x multiple a year ago. The valuation multiple has clearly expanded.

So, a very obvious question is: Is Google still worth buying? The short answer is, yes.

In the base-case scenario, where EPS grows at 18% per year for the next five years, the stock is still trading below its intrinsic value of $336.20, yielding a 21% annual return.

However, if the EPS growth rate falls below 18%, the returns will likely be lower than expected.

So, a very obvious question to ask is: What’s wrong? Is KKR the business struggling just like KKR the stock? Or is there more to the story than the 1-year chart is telling?

I’ll try to answer these questions as I analyze the performance of KKR’s most recent quarter and the growth opportunities that might create long-lasting value for the company. I will also discuss KKR’s valuation at these levels to justify why I think now might be a good time to buy KKR.

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Q3 Performance

To begin with, KKR’s Q3 2025 results were really good by all standards.

We saw an increase of 15.3% in revenues and an impressive 43% uptick in net income. And the numbers suggest that expense control played an important role here. Although total expenses did increase by 5.86%, the expenses in the asset management and strategic holdings segment actually decreased by over 21%.

On top of that, KKR’s AUM (Assets Under Management), Fee Paying AUM, and Perpetual Capital all moved upwards. AUM and Fee Paying AUM increased by 16% YoY in Q3, and perpetual capital went up by 19% as well.

This positive change could be attributed to Global Atlantic‘s (KKR’s insurance segment) asset base and strong fundraising. In Q3, KKR raised $43 billion in funding. Dry powder, which is capital that is available to deploy, reached $126 billion.

The reason I’m mentioning these numbers is because they highlight that investors are willing to commit their capital to KKR, and because of its dry powder, KKR wouldn’t be sitting on the sidelines when lucrative opportunities come its way.

Valuation

FRE Margins

An important metric that I pay special attention to whenever I analyze an asset manager is the Fee-Related Earnings ((FRE)) margin.

Since, KKR and other asset managers earn a majority of their revenue by charging fees on capital that is committed to their funds, the FRE margin is essentially an indicator that tells how much of that revenue turns into income.

The FRE margin, in KKR’s case, is the highest in the industry. Not only did it have the highest margin in 2023 (around 62%), I like the fact that the company is still focusing on further improvements. In 2025, the FRE margin touched 69%, which represents a difference of 100 basis points from another industry leader, Blackstone (BX), and much more than other managers.

You might be thinking, but how does KKR pull this off? How does it have these high margins that other asset managers might aspire to?

I’d say the first contributing factor is its emphasis on operational leverage, which simply means increasing revenues without letting fixed costs catch up.

Secondly, KKR has a Capital Markets business which is a very high margin revenue stream. This segment contributes in part to the higher margins than its competitors because these fees are also counted in the “Fee-Related Revenue”.

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Comparing Distributable Earnings (DE) Multiples

Although the FRE margins of KKR are industry frontrunners, and its revenues and net income are also increasing in double digits, it is still trading at a discount relative to other companies.

The reason it is being priced at a premium over Apollo (NYSE:APO) is due to the FRE mix. In other words, Fee-Related Earnings constitute 75% of the earnings of KKR whereas they are just 45% of Apollo’s earnings since the latter is more dependent on Spread-Related Earnings ((SRE)). And this makes a lot of difference when valuing asset managers, and justifiably so.

Fee-Related Earnings are deemed superior because they are less volatile and stickier than SRE. Simply put, the greater the concentration of FRE in total earnings, the greater the premium paid.

If you look at BAM, it is priced the most expensive among its peers (around 33x). And the reason is that nearly all of its revenues are fee-based. Blackstone comes second, with FRE concentration of around 85%.

Historical Valuation vs Present

Just to be clear, the triple-digit DE growth of KKR in 2021 was because of

1. its take-over of Global Atlantic that added approximately $90 billion to its asset base

2. Private Equity firm exits were at the optimal level which contributed significantly to KKR.

3. the Capital Markets business produced lucrative revenues since IPOs were at their peak.

During the next two years, however, the exits and M&A activity decelerated considerably because interest were at their peak and consequently, the cost of capital went up.

This had a negative impact not only on KKR but on all other asset managers as well. In 2024, the growth rates began to improve as the interest rates began to fall.

To determine the present valuation of KKR, I have considered the TTM Distributable Earnings of $5.45 to be the starting point.

Since the stock is currently trading near $114, there is a discount of approximately 14% from the midpoint of $133.21. Even if Distributable Earnings grow at 12% for the next five years, we’re looking at a 15% annual return at today’s prices.

What’s Next?

To understand where KKR is heading, I looked into its recent press releases, and this undertaking was very helpful indeed.

To begin with, I believe the company will be much more active in the Middle East especially Saudi Arabia and the GCC (Gulf Cooperation Council). This can be seen by the recent news of the company having a major financing agreement of $550 million with ACWA Power. Not only that, it also expanded its presence in the region with a new office in Abu Dhabi.

Secondly, it has been pouring a lot of money into energy, data centres and warehouses, which are all in high demand at present. Plus these asset classes are projected to be expanding in the coming years quite a lot.

Moreover, KKR is becoming an active seller of its investments in businesses such as OneStream that IPO’d in 2024 and MasOrange. I believe that these exits will greatly increase the Distributable Earnings and therefore bring cash to the company that it can invest in the future.

Risks

No doubt, I strongly believe that KKR has immense potential to provide excellent returns in future, but there are also certain risks that are good to know in advance. The majority of the risks that I see for KKR are macroeconomic business risks, which are common to all asset managers in general, interest rates being the most prominent among them. High interest rates may create enormous turbulence in the business of KKR, as it did in 2022 and 2023.

If you look at KKR’s beta, it is 2.0. In simple terms, it is two times more volatile than the S&P 500 index. Unless you are an investor who does not mind sharp upswings and downswings, KKR might not be the right investment for you.

Another KKR-specific risk that I see is the underperformance of its funds. In a situation where a fund managed by KKR doesn’t perform well, it has to pay back investors, what is usually called a clawback.

However, despite these risks, I think KKR’s experience and strong position in the industry will help it immensely to do well in the long term.

The Bottom Line

I genuinely believe that KKR is one of the best asset managers in the market. The southward movement of KKR’s stock stems from worries about private credit industry and weak sentiment towards alternative managers, not due to fundamental issues in KKR’s business.

It has great margins, revenues and net income are increasing in the double digits and it is trading below its intrinsic value.

If you are an dividend investor, the ~0.6% dividend yield of KKR might not be attractive enough. However, If you are targeting capital appreciation, I strongly think KKR can achieve returns that outshine the market in the next five to ten years.