ADS Update - One Step Back For APO And, Likely, Peers

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ADS Update - One Step Back For APO And, Likely, Peers

or decelerating. We set our

targets against our 2026 earnings expectations, discounted at the firm’s cost of equity, the

latter using capital asset pricing model, including company specific beta, 7% normalized equity

return and risk-free rate as defined by the 10-year US Treasury Yield.

We make investment recommendations on certain early stage, pre-revenue companies based

upon an assessment of their business model, technology, probability of market success,

and the potential market opportunity, balanced by an assessment of applicable risks. Such

companies may not be assigned a price target.

Investment Risks

Alternative Asset Managers:

Key investment risks include: 1) major decline in capital markets; 2) rising/falling interest rates,

and attendant yield curve, reflecting the difference between US Treasury 10 Year Yield and

the Federal Funds Rate; 3) widening credit spreads; 4) delayed LP allocation trends; 5) shifting

competitive landscape; and 6) changes in regulatory backdrop. Rising interest rates tends to

slow the sector’s flywheel, notably asset gathering, deployment and monetization cycles, and

could elongate retail democratization upcycle. Declining interest rates can reduce insurance-

related DE contribution, and widening credit spreads could portend a potential economic

recession, impacting certain segment returns, NAVs and multiples.

Traditional Asset Managers:

Key investment risks include: 1) major decline in capital markets; 2) further passive and

alternatives encroachment; 3) pricing pressure – idiosyncratic reductions, adverse mix shifts

and shifting industry demographics; 4) idiosyncratic capital deployment; and 5) changes in

regulatory backdrop.

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