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Bank of America is bullish on alternative asset manager stocks as they underperformed in 2022, while their fee-related earnings grew and valuation range tightened.
“Their valuation range declined back to pre-CCorp conversion levels. This development made us more bullish, especially on the fastest growers (NYSE:OWL) and the most offensive income statements (NYSE:KKR),” said analyst Craig Siegenthaler.
BofA’s five Buy-rated stocks in the space are:
- Blue Owl Capital (OWL): “We believe OWL is deeply undervalued due to its lack of long-only ownership relative to its fast and defensive earnings stream.”
- KKR (KKR): “We think KKR is undervalued relative to its growth and expect its offensive income statement drivers to rebound over the next few quarters.”
- Interactive Brokers (IBKR): “Valuation is too low for a company growing its account base organically at 20-40%. We have high visibility into near-term growth momentum given two large introducing broker wins.”
- Focus Financial Partners (FOCS): “We are bullish on FOCS into a recovery after it generated near record M&A activity last year and was the best performer in our coverage in the last bull market.”
- Intercontinental Exchange (ICE): “We think ICE is out-of-favor and believe markets are underappreciating growth potential in mortgage tech as well as synergies from its BKI acquisition.”
Read why SA contributor Mike Zaccardi sees upside in Blue Owl (OWL) and why The Value Puzzle believes KKR (KKR) might be a surprise winner of a rocky 2023.
