APO: Bearish Signal on Apollo Global Management - Time to Buy Puts?

Apollo is a global alternative asset manager and retirement services provider. Its core business segments are Asset Management, Retirement Services, and Principal Investing. The Asset Management segment focuses on credit and equity investing strategies, including direct origination, asset-backed finance, opportunistic credit, and multi-credit strategies. Its equity strategies include corporate private equity, hybrid value, 'AAA', real estate equity, and infrastructure equity. The Retirement Services segment, conducted through 'Athene', specializes in retirement savings products like fixed indexed annuities ('FIAs'), fixed rate annuities, and registered index-linked annuities ('RILAs'), targeting individuals and institutions seeking retirement funding. Apollo differentiates itself through a contrarian, value-oriented investment approach emphasizing downside protection, and by offering a full suite of services for 'Athene's' investment portfolio.

APO's technical outlook is bearish. The price has declined significantly over the past 90 days, from approximately $141.35 on June 30th to $130.52 as of November 4th. The stock is trading below its 21-day EMA ($125.93), 50-day SMA ($131.20), and 200-day SMA ($139.12), confirming the downtrend. Momentum indicators also suggest weakness. The MACD is negative (-2.05), and the MACD signal line is even further negative (-2.49), with the MACD histogram showing little sign of reversal. The RSI is at 43.89, indicating that the stock is not yet oversold but trending downward. Stochastic %K is at 42.74, with %D at 46.91, suggesting the stock has downward momentum. The ADX is at 24.14, indicating a strengthening trend, which, in this case, is bearish. Recent price action shows a failure to sustain any upward momentum, with several attempts to rally being sold off. Given these factors, the likelihood of continued downside movement over the next 1-3 months is high.

Apollo Global Management's MD&A presents a nuanced picture. The Asset Management segment experienced revenue growth, with management fees rising by $121 million to $583 million for the three months ended June 30, 2025, driven by Atlas, S3 Equity and Hybrid Solutions, and ADS. Advisory and transaction fees also increased by $10 million to $277 million. However, investment income decreased by $89 million due to lower performance allocations. The Retirement Services segment saw revenues increase by $743 million to $5.7 billion, fueled by net investment income, revenues from consolidated VIEs, and investment-related gains, although premiums decreased by $566 million. SRE was $821 million in 2025, an increase of $111 million compared to 2024. Principal Investing Income (PII) increased by $14 million to $47 million, driven by realized performance fees. Operationally, net cash provided by operating activities was $2,274 million for the six months ended June 30, 2025. Apollo had $12.7 billion of unrestricted cash and cash equivalents, along with $5.1 billion in available funds from credit facilities. A conditional commitment to invest up to an additional $2.0 billion in Athora is pending, subject to closing conditions. The company expects to continue to fund the asset management business’ operations through management fees and performance fees received.

Apollo Global Management's Q2 2025 earnings call projects a strongly bullish outlook, driven by record FRE of $627 million, a 22% year-over-year increase, and management fee growth of 21%. CEO Marc Rowan highlighted the strength of their origination platform, stating '$81 billion originated from our platforms and our business in the quarter.' He emphasized the quality of these originations, noting excess spread over treasuries of 350 basis points. Robust inflows of $61 billion led to a record AUM of $840 billion. The retirement services segment also saw significant demand, with $21 billion of inflows. Management is particularly optimistic about the potential of the U.K. market following Athora's acquisition of PIC, viewing it as 'what Athene is to the U.S. market.' The company is also innovating in areas like 401(k) plans and partnerships with traditional asset managers, anticipating significant changes in the regulatory landscape. Jim Zelter pointed out the origination of $75 billion of debt, comprised of $60 billion of investment-grade credit with an average rating of A- and $15 billion of sub-investment-grade credit with an average rating of B. CFO Martin Kelly stated they are 'tracking to the higher end of our 15% to 20% FRE guide' for the year. Overall, management's tone is confident, emphasizing the strength of their diversified platform and origination capabilities.

APO's financial performance presents a mixed but overall stable outlook. Revenue has fluctuated, starting at $7.04B in Q1 2024 and reaching $6.55B in Q2 2025, showing some volatility but remaining relatively high. The `grossProfitRatio` has consistently remained above 0.90, indicating healthy profitability on sales, with the most recent quarter reporting a ratio of 1.0. `OperatingCashFlow` has varied significantly, from $70M in Q1 2024 to $1.012B in Q1 2025, but data is missing for the most recent quarter. Total debt increased from $9.596B in Q1 2024 to $12.144B in Q2 2025, indicating a moderate increase in leverage. While revenue is not consistently growing, the high gross profit ratio and positive operating cash flow in the latest period with available data suggest financial stability, though the increase in debt should be monitored. The company's ability to maintain high margins and generate cash is crucial for its near-term financial health.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.