2Q26 Preview: Constructive Backdrop Creates Compelling Opportunity

研报英文原文证据摘录

2Q26 Preview: Constructive Backdrop Creates Compelling Opportunity

IdeaM

Executive Summary

We see scope for potential positive inflection across the alts in the context of limited

investor positioning, and continued negative sentiment with the alts down -20% YTD

(amongst the worst performing sub sectors within financials). Weighing on the stocks

this year include a number of concerns, ranging from private credit fears, to private

wealth redemptions in non-traded BDCs, software disruption fears, and geopolitical

uncertainty that's seen declining EPS revisions. Investor positioning remains light but we

expect positive commentary on 2Q conference calls around broader growth initiatives

across diversified managers, with likely institutional fundraising strenth against a building

realization cycle that should boost investors' confidence. We lean positively on the alts

here given a constructive setup taking shape and positive readacross from recent bank

earnings that bodes well for transaction activity that should boost earnings. Into the qtr,

we revise our numbers down modestly (2q26 EPS by -2% on avg) but raise our 2026 EPS

est by +1% on average while our 2027 ests stay unchanged on average as the longer term

outlook for fundraising and earnings power remain intact. Continue to prefer scaled OWs

APO, BN, BX, KKR as ways to play the space.

Into the qtr, we see a more constructive setup taking shape for the alts, with sponsor-

announced M&A volumes +16% y/y in 2Q26 — a backdrop that should bode well for

realizations and earnings. Our discussions with the alts suggest institutional fundraising

remains healthy with a number of large flagship closes in 2Q (including KKR's Arctos

Keystone Fund I closing at $6.2b, above its $4b target; BX's Asia PE III closing at $13.1b,