According to the Zhongtong Finance APP, globally renowned billionaire investors have recently been injecting funds into the alternative investment field. For example, Mario Gabelli from GAMCO Investors recently increased his shareholding in leading global alternative asset management giant KKR (KKR.US). Famous investor Ron Baron has recently chosen to establish a position in KKR. In addition, globally famous value investor Joel Greenblatt has also chosen to significantly increase his shareholding in KKR.

At the same time, another well-known alternative asset management company, Brookfield Asset Management (BAM.US), has recently been added to Steven Skrugge's key investment portfolio. Skrugge manages the highly popular FPA Queens Road Small Cap Value Fund, which is well received by US stock retail investors and individual investors. Asset management giant Third Avenue Management has also chosen to increase its shareholding in Brookfield Asset Management, and Ron Baron has also increased his shareholding in this alternative asset management company. This is the second consecutive quarter that he has increased his shareholding in this alternative asset management company.

In addition, these two leading global alternative asset management companies, as well as Blackstone Group (BX.US), Blue Owl Capital (OWL.US), the Carlyle Group (CG.US), and other peers, have reported very strong fundraising and financing momentum in recent quarters and years.

In the foreseeable future, there is a high probability that these strong fundraising trends of alternative asset management companies will continue. Each team in these top-tier alternative asset management firms has announced continuous and very strong fundraising growth guidance, as the aging trend of populations in developed economies suggests that an increasing number of individual investors and institutions will prioritize stable and reliable cash flows and attractive returns. Private credit, real estate, infrastructure, and private equity, which are known for generating diverse returns, are the preferred investment models.

In addition, due to the need for large-scale expansion of infrastructure to drive the AI boom and the possibility of the imminent start of the Fourth Industrial Revolution, as well as the growing geopolitical risks leading to reinvestment and restructuring of global supply chains, there is a significant demand for additional investment in core supply chain substitutes for alternative assets such as infrastructure.

In many large financial markets, especially in the United States, investment opportunities in residential real estate are also very attractive. In recent years, the ongoing shortage of housing in the United States has resulted in a significant increase in rental prices. Alternative asset management companies such as Blackstone and KKR have recently made major acquisitions of publicly traded standard real estate companies and real estate investment trusts (REITs) with multi-unit and single-unit properties, which is enough to illustrate this point.

Besides the two major alternative asset management giants, which other similar companies are worth paying attention to?

Given the optimistic attitude of the billionaires leading the large amounts of capital towards the alternative asset management companies, apart from the aforementioned KKR and Brookfield Asset Management company that investors should focus on, Samuel Smith, Vice President of Leonberg Capital, also suggested two other leaders in the alternative asset management sector, including Blue Owl Capital (OWL.US) and Patria Investments (PAX.US).

Samuel Smith is particularly bullish on Blue Owl Capital because 76% of the assets managed by this alternative asset management company are in permanent capital funds. In addition, its revenue comes entirely from fee-related categories, rather than equity sources, making its revenue flow and cash flow more stable and reliable compared to many peers.

In addition, Blue Owl Capital is highly concentrated in the private credit and direct lending sector, with approximately half of its managed assets coming from this area. Especially since this industry is currently experiencing very strong growth and is likely to continue to develop, it presents more attractive growth prospects. This is reflected in the fact that Wall Street analysts generally expect its EPS to grow at a compound annual growth rate of approximately 20% by 2026, while Brookfield Asset Management and Blackstone's compound annual growth rate expectations are only 15.6% and 13.2%, respectively.

However, the P/E ratio of Blue Owl Capital is lower at 19.8x, compared to approximately 26.5x for Blackstone, and around 26.8x for Brookfield Asset Management. Yes, due to the relatively low credit rating of the company, its smaller scale, and a greater focus on the risks of direct lending, it is an industry that is less mature than real estate and infrastructure from a long-term perspective, while Blackstone and Brookfield Asset Management are more focused on the real estate and infrastructure.

Blue Owl Capital's balance sheet remains very strong, with a 'BBB' credit rating from Standard & Poor's, approximately $2 million in available liquid funds, and no debt maturing before 2028. In addition, its dividend growth rate is very rapid, with management expecting to continue actively growing dividends, with a target of paying approximately $1 per share in dividends around 2025. In just the past year, Blue Owl Capital's dividends have grown by approximately 29%.

At the same time, Samuel Smith, Vice President of Leonberg Capital, is also optimistic about Patria Investments (PAX.US), mainly because of its dividend yield of approximately 5.4%, and very lucrative fee-related income. In addition, its P/E ratio of only 7.6x is far lower than that of other peers in alternative asset management, but its expected EPS compound annual growth rate is higher than most peers. According to the consensus estimate of Wall Street analysts, the projected EPS compound annual growth rate for Patria Investments is 25.2% by 2026, whereas Blue Owl Capital is approximately 20.6%, Blackstone Group is 13.2%, and Brookfield Asset Management is approximately 15.6%.

It should not be overlooked that due to its relatively smaller size and concentration in the politically unstable Latin America, Patria Investments may have greater risks compared to its peers, but the depth of its valuation discount seems to be too large relative to this incremental risk.

In addition, considering the expected prosperity of commodities in Latin America in the next few years - Latin America is a gathering place for the production and export countries of major global core commodities, as well as the geopolitical tension in the Middle East and Asia-Pacific which may benefit Latin American countries (especially Mexico - one of Patria Investments' main investment markets), this point is particularly important. Therefore, Samuel Smith tends to consider Patria Investments as a deeply undervalued high-yield/high-growth holding for the institution's portfolio in order to gain exposure to Latin America.

It may be the new investment trend globally.

Overall, alternative asset investments, led by numerous well-known billionaires investing real money, have the potential to become the new investment trend in global financial markets. Especially alternative assets such as private equity, real estate, infrastructure, and private credit are considered to have stable and reliable cash flows. These asset classes can provide relatively stable returns during market fluctuations and economic uncertainties, which is particularly attractive to wealthy investors seeking long-term returns and capital preservation, as well as investors looking for target investments with both dividend yields and hedging value.

The advantages of long-term capital and income models make these alternative asset management companies highly favored by the wealthy. For example, Blue Owl Capital has approximately 76% of assets under management in its permanent capital funds, with revenue entirely derived from fee-related income rather than carried interest, making its revenue stream more stable and reliable. Therefore, the combination of these companies' lower valuations and strong growth potential makes them an ideal choice for wealthy investors. The ongoing housing shortage problem in the United States has led to significant rent increases, prompting alternative asset management companies like Blackstone and KKR to actively invest in publicly traded real estate companies and REITs with multi-family and single-family models, driving the potential income growth of alternative asset management companies.

Investors can combine stocks from alternative asset management companies such as KKR, Brookfield Asset Management, Blue Owl Capital, and Patria Investments to obtain attractive median dividend yields (such as 5% for Blue Owl Capital and approximately 5.4% for Patria Investments), as well as very strong earnings per share growth prospects. Even in a period of global economic slowdown, the free cash flow and dividend income streams closely related to the fundamentals are quite robust. In the long run, for patient investors, both Blue Owl Capital and Patria Investments seem to offer highly attractive risk-adjusted total return potential.