① To cope with potential market turmoil, Apollo Global is increasing cash reserves, reducing leverage, and withdrawing from the riskier bond market; ② CEO Mark Ron stated that the company is in a risk-reduction mode and has already prepared its insurance subsidiaries for potential risks. The company Athene increased its liquidity reserves and reduced its leveraged loan portfolio significantly; ③ Apollo also worked to reduce risk in areas vulnerable to technological change.
Apollo Global Management , a well-known US asset management company Apollo Global's top management is preparing for potential market turmoil. The company is currently increasing its cash reserves, reducing leverage, and withdrawing from the riskier bond market.
The company’s CEO, Marc Rowan, believes that this defensive strategy will prepare Apollo for more challenging credit and stock markets in the future and enable the company to make larger investments better in any turbulent period.
Multiple warnings
This month, Rowan privately told investors that his top priority was to "ensure the company has the best possible financial condition" so that Apollo could achieve good performance and profitability.
According to sources familiar with the matter, Rowan's remarks came during a Goldman Sachs meeting. He made the remarks at a private meeting, where he expressed his concerns about excessive behavior in many of the rapidly growing sectors of the financial markets.
Rowen had previously told investors during the company’s earnings call in November that “we believe current valuations are high, long-term interest rates are unlikely to fall significantly, and we also face increased geopolitical risks.”
"As a company, we are in a risk-reduction mode. We have always advocated for risk reduction. Our balance sheet is also in a risk-reduction mode."
At an internal employee meeting earlier this month, Apollo's management also emphasized defensive strategies. One executive who attended the meeting said, "I sensed a tension in everyone here, a fear that the market might experience another period of sharp volatility."
Investment strategy shift
In response to potentially more volatile financial markets, Apollo has increased liquidity reserves for its subsidiary Athene, purchased hundreds of billions of dollars in additional Treasury bonds, and reduced its leveraged loan portfolio significantly.
Apollo has publicly stated that Athene is reducing its exposure to secured loan obligations (CLOs) by about half to $20 billion.
CEO Rowen made the above remarks in a private meeting with investors. Rowen also warned of a “contagion risk” in certain areas of the insurance market, where private equity groups are growing rapidly without adequate regulatory oversight.
He explained that, given that assets transferred from the United States to overseas have been taken over by U.S. insurance companies, which will ultimately be responsible for compensating for the losses (because they lack federal protection), the insurance industry may experience a spread of defaults.
In addition, Apollo is also working to mitigate risk in areas vulnerable to technological change. Reports last week indicated that Apollo is rapidly reducing its investment in software-based lending, areas considered potentially susceptible to disruptions caused by artificial intelligence. Facing risks and challenges.
With $908 billion in assets under management, Apollo Systems is closely watching this development given its influence in the financial markets.
(Article source: CLS)
