Steep Drawdowns For PE Stocks

Publicly-traded private equity stocks are taking it on the chin again today, continuing an extremely rough stretch for the group that began in early January.  The reason for the recent plunge: fears of over-exposure to software companies that are suddenly at risk of extinction from AI.

A group of six alternative asset companies that includes well-known firms like Apollo (APO), KKR (KKR), and Blue Owl (OWL) is now in an average drawdown of 43.1% from all-time highs, which were hit in November 2024 shortly after President Trump was re-elected.

Carlyle Group (CG) has so far been spared the most with a drawdown of only 25%.  The other five stocks in the table below are all down 40%+ from highs.  Blue Owl Capital (OWL) is down by far the most at -60.1%.

Below are price charts for two of the PE companies in the table above going back to 2020: Apollo (APO) and Ares (ARES).

What's important to highlight is that the current drawdown in the private equity space is now just as extreme as the one seen during the nasty bear market of 2021/2022 when the SPAC/meme-stock bubble burst.  As shown, Apollo (APO) is down 40.1% now versus a peak to trough decline of 41.8% in 2022, while Ares (ARES) is down 43.7% from its November 2024 all-time high versus a drop of 39.5% during the 2021/2022 bear market.

Back in 2022, the broader market fell in lockstep with PE stocks, as the S&P ultimately fell 25% and the tech-heavy Nasdaq 100 fell 35%.  So far during the current PE sell-off, the Nasdaq 100 is down less than 5%, while the S&P 500 is 1.5% below all-time highs.