Bill Katz

Bill Katz inquired about Ares Management's big-picture opportunities in real assets (especially real estate) and secondaries, given the shifting macro backdrop. He also sought clarification on the timelines and expected sizes for the upcoming flagship credit fund launches.

Answer

CEO Michael Arougheti outlined plans for the final close of the third opportunistic credit fund early this year (at or above $7.1 billion), the third ABF fund (Pathfinder) by summer (at or above $6.6 billion), the fourth U.S. direct lending fund in Q4 this year, and the seventh European direct lending fund in early 2027. He emphasized significant growth potential in real assets and secondaries, citing transformational changes in secondaries and a cyclical recovery in real estate with secular tailwinds in logistics.

Bill Katz asked about the significant opportunities in real assets, particularly real estate, and the secondaries platform given the shifting macro environment. He also requested an update on the timelines and expected sizes for Ares' flagship credit vehicles.

Answer

Michael Arougheti, CEO of Ares Management Corporation, outlined the upcoming flagship credit funds: Opportunistic Credit Fund 3 (final close early 2026, at/above $7.1 billion), ABF Pathfinder 3 (by end of summer, at/above $6.6 billion plus $3.5 billion extended capital), U.S. Senior Direct Lending Fund 4 (Q4 2026 close), and European Direct Lending Fund 7 (early 2027 close). He emphasized the transformational growth in secondaries (doubled AUM/profitability in 4.5 years) and the attractive cyclical position of real estate.

Bill Katz requested an update on the GCP transaction, focusing on its growth opportunities in infrastructure and real estate, in addition to the margin expansion discussed by Jarrod Phillips.

Answer

Jarrod Phillips, CFO, Ares Management Corporation, highlighted the successful integration of GCP, emphasizing the expansion of the real estate platform, which made Ares one of the three largest alternative real estate managers globally. He also expressed excitement about data center opportunities, particularly urban-adjacent sites for cloud computing and AI, with $6 billion in the ground for development. He mentioned smaller growth areas like the self-storage business, affirming that GCP aligns with Ares' FRE and RI growth targets.

Bill Katz requested an update on the GCP transaction, focusing on the growth opportunities within infrastructure and real estate, in addition to the margin expansion discussed.

Answer

Jarrod Phillips, CFO of Ares Management Corporation, confirmed the GCP integration is progressing well, highlighting the expansion of the real estate platform to become one of the three largest alternative real estate managers, providing scale and global presence. He also emphasized exciting opportunities in data centers, particularly urban-adjacent sites for cloud computing and AI, with $6 billion in the ground for development. He noted that GCP's growth profile aligns with Ares' targets for FRE and RI growth.

Bill Katz inquired about the perceived disconnection between the prolific CapEx cycle of hyperscalers and Blue Owl's digital infrastructure opportunity, including credit risk considerations. He also asked for an update on Blue Owl's progress towards its Investor Day goals, given the 2025 and 2026 implied guidance.

Answer

Co-CEO Marc Lipschultz addressed the accelerating hyperscaler CapEx cycle, citing Google's increased guidance, and highlighted Blue Owl's premier position in providing capital solutions through ironclad 15-20 year leases. He noted ORENT's 11% return and 7% yield, and strong fundraising for digital infrastructure and real estate funds. CFO Alan Kirshenbaum acknowledged that Blue Owl is currently behind its 5-year Investor Day targets due to recent headwinds but guided for modest FRE per share growth in 2026, accelerating in 2027, with FRE margins targeting 58.5%.

Bill Katz inquired about the perceived disconnection between the hyperscaler CapEx cycle and Blue Owl's digital infrastructure opportunities, including credit risk considerations. He also asked for an update on Blue Owl's progress towards its Investor Day goals, given the 2025 and 2026 guidance.

Answer

Co-CEO Marc Lipschultz described the accelerating hyperscaler CapEx cycle as an enormous opportunity, with Blue Owl as a premier capital solutions provider. He noted hyperscalers' commitment to 15-20 year leases, driving strong returns in digital infrastructure and triple-net lease products like ORENT (11% return, 7% yield). CFO Alan Kirshenbaum acknowledged that Blue Owl is currently behind its five-year Investor Day goals due to headwinds in private credit and wealth flows. He projected a modest increase in FRE per share growth for 2026, accelerating in 2027, and an FRE margin target of 58.5% for 2026, up from 58.3% in 2025.

Bill Katz posed a big-picture question on the industry's prospects amid AI uncertainty, the evolution of wealth management flows (especially private credit), and whether historical return assumptions remain valid for private equity and credit deployment.

Answer

Partner and Head of Investor Relations Craig Larson noted that K-Series products raised $4.5 billion in Q4 2025, with January 2026 flows projected at $1.3 billion, demonstrating resilience despite volatility and reinforcing the long-term wealth management opportunity. Co-CEO Scott Nuttall affirmed no change in deployment expectations (up in 2026) or return expectations, highlighting that market anxiety historically presents strong buying opportunities for KKR stock and leads to excellent vintage years for investments.

Bill Katz posed a broad question about the industry's prospects given AI uncertainty, specifically asking about the evolution of wealth management flows, particularly in private credit, and whether historical return assumptions remain valid for KKR's private equity and credit portfolios.

Answer

Partner and Head of Investor Relations Craig Larson stated that KKR's wealth management flows remain strong, with K Series products raising $4.5 billion in Q4 2025 and $1.3 billion in January 2026, up 20% year-over-year, despite market volatility. Co-CEO Scott Nuttall affirmed no change in deployment expectations, anticipating an increase this year, and no change in return expectations across asset classes. He noted that market anxiety often creates strong buying opportunities for KKR's stock and leads to excellent vintage years for investments.

Bill Katz inquired about the expected ROE trajectory for KKR's insurance business, seeking a normalized level and timeline for achieving it, and also asked about potential expense mitigants to soften any differential from the $7+ ANI guidance if monetization slows.

Answer

CFO Rob Lewin emphasized focusing on the $1.8 billion LTM insurance economics (page 20 of the earnings release) and scaling these through KKR's investment platform, global origination, and third-party capital. He noted that the $200 million annual run rate of accrued income, not yet in reported numbers, is expected to start hitting the P&L around 2027-2028. Lewin reiterated confidence in achieving the $7+ ANI guidance for next year, acknowledging its dependence on a constructive monetization environment, and clarified that the 2026 TOE target is less relevant due to the cash vs. accrued impact on insurance earnings.

Bill Katz inquired about the ROE trajectory for KKR's insurance business, seeking a normalized level and timeline, and asked about potential expense mitigants for the 2026 Adjusted Net Income (ANI) guidance.

Answer

Rob Lewin, Chief Financial Officer, referred to page 20 of the earnings release, highlighting the LTM insurance economics of $1.8 billion. He emphasized scaling these economics through KKR's investment platform, global origination, and third-party capital. Lewin noted that the $200 million of annual run-rate accrued income not yet in the P&L is expected to start hitting in 2027-2028. He reaffirmed confidence in achieving the $7+ ANI guidance for 2026, acknowledging its dependence on a constructive monetization environment, and clarified that the 2026 Total Operating Earnings (TOE) target is less relevant due to cash vs. accrued impacts.

Manu on behalf of Bill Katz at TD Cowen asked for an update on KKR's asset-backed finance (ABF) platform, including its sourcing funnel and bank partnerships, heading into the rest of 2025.

Answer

Executive Craig Larson highlighted the significant scale and growth of the ABF business, with AUM at $74 billion, up 35-40% year-over-year. He described the market as a massive opportunity with high barriers to entry, noting that KKR is well-positioned to fill a void left by traditional providers. He also pointed to strong deployment, with over $4 billion in Q1, suggesting a favorable environment for the strategy.

Bill Katz from TD Cowen posed a two-part question concerning CME Group's capital allocation strategy, including the prospective approach to share buybacks related to OSTTRA proceeds and the go-forward payout dynamic, as well as the durability of market data and information services revenue given potential AI disintermediation risks.

Answer

CFO Lynne Fitzpatrick confirmed that OSTTRA proceeds would be deployed towards share repurchases over time. Julie Winkler, Chief Commercial Officer, highlighted the recurring subscription revenue of the market data business, noting 31 consecutive quarters of growth and strong momentum into 2026. Chairman and CEO Terry Duffy clarified that CME Group's proprietary data is critical for client risk management and trading algorithms, suggesting AI could enhance rather than disrupt their business, unlike some competitors in ancillary services.

Bill Katz inquired about CME Group's prospective capital allocation strategy, particularly concerning the use of OSTTRA proceeds for share repurchases and the go-forward payout dynamic. He also asked about the durability of market data and information services revenue amidst potential AI disintermediation risks.

Answer

CFO Lynne Fitzpatrick confirmed the use of OSTTRA proceeds for share repurchases. Chief Commercial Officer Julie Winkler highlighted the recurring subscription revenue of the market data business and explained that AI is seen as an enhancer for clients' trading algorithms, not a disintermediation risk for CME Group's proprietary data.

Bill Katz asked about the current client demand for tokenized money market funds, differentiating between institutional and retail interest, and what regulatory or legislative milestones are needed for faster adoption. He also inquired about the underlying drivers of demand for MDT strategies and potential capacity constraints.

Answer

Chris Donahue, President and CEO, noted that end client demand for tokenized products is not yet robust, viewing it as preparation for future trends, and highlighted the need for significant money movement and structural clarity, both domestically and globally. Debbie Cunningham, CIO, added that U.S. use cases focus on distribution, diversification, collateral, and margining, while international interest is stronger from family offices. Regarding MDT, Chris Donahue stated no foreseeable capacity constraints, attributing demand to the sales force's ability to showcase MDT's pure style box discipline across retail and institutional clients. Tom Donahue, CFO, specified that Q4 MDT net sales were weighted two-thirds towards mutual funds and ETFs, with the remainder from institutional and SMAs.

Bill Katz inquired about client demand for tokenization, differentiating between institutional and retail interest, and asked about regulatory or legislative milestones needed for faster adoption. He also asked about the underlying drivers of demand for MDT strategies and any potential capacity constraints.

Answer

Chris Donahue, President and CEO, and Debbie Cunningham, Chief Investment Officer for Money Markets, noted that while end client demand for tokenization isn't yet robust, the firm is preparing for future trends, with U.S. use cases focused on distribution and collateral, and international interest from family offices. Chris Donahue stated there are no capacity constraints for MDT strategies, attributing demand to the sales force's ability to consult on MDT's pure style box discipline, attracting both retail and institutional clients. Tom Donahue, CFO, added that Q4 net sales were weighted two-thirds towards mutual funds/ETFs.

Bill Katz inquired about the possibility of accelerating capital deployment, specifically share repurchases, asking for mileposts to consider resuming capital return. He also asked about LPL's interest rate management strategy, particularly the shape of the fixed-to-float mix, given current forward curves.

Answer

President and CFO Matt Audette indicated that LPL is ahead of schedule on deleveraging and Commonwealth onboarding prep, suggesting an opportunity to resume share repurchases potentially a quarter earlier than Q4. Regarding fixed-rate sweep, he stated no change in plan, expecting to return to the typical low-to-mid 60% range in Q1 after the year-end build-up in December.

Bill Katz asked about the possibility of accelerating capital deployment, specifically share repurchases, and the mileposts to consider for resuming capital return. He also inquired about LPL Financial's interest rate management strategy, particularly the fixed-to-float mix, given stable forward curves.

Answer

President and CFO Matt Audette indicated that LPL is ahead of schedule on deleveraging and Commonwealth onboarding prep, suggesting share repurchases might resume a quarter earlier than initially planned, with an update in a future quarter. Regarding fixed-rate sweep, he stated no change in plan, expecting to return to the typical low-to-mid 60% range in Q1 after the year-end build-up in December.

Bill Katz asked about the evolution of retail opportunities, specifically how lower interest rates might affect the appeal of income-oriented vehicles, and Blackstone's positioning for this trend, including product, geography, and distribution plans for 2026.

Answer

Jon Gray, President and COO, emphasized Blackstone's broad offerings, including income, income and growth, and growth-oriented products, which allows flexibility if investor preferences shift. He noted that the appeal of private credit extends beyond absolute returns to relative returns and the premium generated, citing strong institutional fundraising even with lower base rates. He also highlighted that equity-oriented products benefit from lower rates, which Blackstone is well-positioned to capture.

Bill Katz asked about the evolving retail opportunities, specifically addressing concerns that declining interest rates might reduce the appeal of income-oriented vehicles. He sought to understand Blackstone's strategy if this trend continues, including planned product launches, geographic expansion, and distribution opportunities for 2026.

Answer

Chairman and CEO Steve Schwarzman emphasized Blackstone's broad range of offerings, including income, income-and-growth, and growth-oriented products across private equity, infrastructure, real estate, and credit, which provides flexibility if investor preferences shift. He noted that the appeal of private credit extends beyond absolute returns to include relative return premiums, citing BCRED's significant flows even when base rates were near zero. He also highlighted that equity-oriented products benefit from lower rates.

Bill Katz inquired about the interplay between Blackstone's FRE margin outlook and its healthy pipeline for realizations, specifically regarding compensation allocation between FRE and gross realizations.

Answer

Vice Chairman and CFO Michael Chae stated that FRE margin dynamics remain healthy, expecting continued operating leverage over time. He noted that comp ratios can vary based on realization mix and vintages, but the firm is content with its basic approach and ability to allocate compensation between the two.

Bill Katz asked Michael Chae about the interplay between Blackstone's FRE margin outlook and the healthy pipeline for realizations, specifically how compensation is allocated between fee-related earnings and gross realizations.

Answer

Michael Chae, Vice Chairman and Chief Financial Officer, affirmed healthy FRE margin dynamics and expected operating leverage over time. He noted that compensation ratios vary based on the mix and vintages of realizations, and Blackstone maintains flexibility in allocating compensation between FRE and carry.

Bill Katz asked for details on the Clark Capital transaction, including its accretion and how it aligns with Raymond James' M&A strategy. He also inquired about potential incremental inorganic opportunities given the strong balance sheet and the path to achieving a 10% Tier 1 Leverage Ratio. Furthermore, he sought clarification on the firm's strategy for supporting interest-earning asset growth and the interplay of third-party liquidity versus net new asset cash, along with a review of January's cash sweep numbers.

Answer

Paul Shoukry, CEO of Raymond James Financial, described Clark Capital as a perfect M&A fit due to its cultural alignment, strategic focus on wealth solutions, and attractive financials, emphasizing its high growth and client relationships. He stated the firm is actively seeking similar deals but will not force acquisitions. Butch Oorlog, CFO, clarified January's numbers, stating total combined sweep and ESP balances were down $2.6 billion, including $1.8 billion in fee billings and client reinvestment. Mr. Shoukry added that strong securities-based loan growth is funded by diversified sources, and a shift from enhanced savings programs to market investments is occurring as rates decline.

Bill Katz asked for details on the Clark Capital acquisition, including its expected accretion, and inquired about Raymond James' interest in incremental inorganic opportunities given its strong balance sheet and the path to a 10% Tier 1 Leverage Ratio.

Answer

CEO Paul Shoukry described Clark Capital as a perfect representation of M&A priorities: strong cultural fit (client-focused, long-term), strategic fit (treating advisors like clients, maintaining independence), and favorable financials. He highlighted Clark Capital's high organic growth, differentiated product, and deep personal relationships. Shoukry affirmed an active corporate development apparatus and capital for deals that make long-term sense for shareholders. In a follow-up on deposit mix and interest-earning asset growth, CFO Butch Oorlog clarified that January's combined sweep and ESP balances were down $2.6 billion, including $1.8 billion in fee billings, with the remainder due to strong client reinvestment. CEO Paul Shoukry added that the shift was demand-driven, with decelerated inflows into ESP as rates declined, and noted strong securities-based loan growth funded by diversified sources.

Bill Katz asked about Raymond James' strategy for funding future earning asset growth, specifically inquiring if the firm would bring third-party sweep deposits onto the balance sheet or run off parts of the investment securities portfolio. He also sought guidance on non-operating expenses and targeted pre-tax margins for the upcoming year.

Answer

CEO Paul Shoukry confirmed that Raymond James has ample funding capacity, including bringing third-party sweep deposits onto the balance sheet and potentially running down parts of the securities portfolio, leveraging its diversified funding apparatus. Regarding expenses, Paul Shoukry reiterated the existing guidance of generating over 20% adjusted pre-tax margins, which was achieved in the current fiscal year. He noted that updated targets would be provided at the next Analyst Investor Day, emphasizing the firm's commitment to growth and technology investments while maintaining strong margins.

Bill Katz questioned the 5% organic growth guidance for 2026, noting it's a deceleration from 2025's 5.1% despite 2025 being a transition year, and asked if 5%-7% remains the long-term goal. He also inquired about the Adjusted Tier-One Leverage Ratio objective and its implications for buybacks.

Answer

President and CEO Rick Wurster affirmed 5% or higher as the right long-term expectation, with 5% being a realistic near-term target given the 18% year-over-year growth in total client assets. He believes above 5% is possible longer-term with investments in workplace, crypto, and retail relationships. CFO Mike Verdeschi confirmed that 6.75%-7% remains the Adjusted Tier-One Leverage Ratio objective, acknowledging it might operate above this range at times due to franchise growth and interest rate impacts on the securities portfolio, but the objective itself is unchanged.

Bill Katz questioned Schwab's 2026 organic growth guidance of 5%, noting it's a deceleration from 2025's 5.1%, and asked if the 5%-7% long-term goal remains. He also inquired about the Adjusted Tier 1 Leverage Ratio objective, given the potential for it to ramp without significant buybacks.

Answer

President and CEO Rick Wurster affirmed 5% or higher as the long-term expectation, with 5% being a realistic near-term target, acknowledging the growing base of total client assets. He believes above 5% is still possible longer-term with investments in Workplace, crypto, and retail relationships. CFO Mike Verdeschi confirmed the 6.75%-7% Adjusted Tier 1 Leverage Ratio objective remains unchanged, noting that fluctuations due to franchise growth and interest rate impacts on securities portfolio value are expected, but the operating objective is firm.

Bill Katz asked for an update on the QQQ proposals, specifically regarding the quorum, approval rate, and the reclassification of marketing spend, and if this reclassification impacts the probability of achieving the required vote.

Answer

CFO Allison Dukes stated that Invesco is pleased with the progress, with an overwhelming majority voting in favor, and that the reclassification of marketing expenses is an accounting adjustment with no impact on the proposal's perception or operating income.

Bill Katz inquired whether the discrete spend related to inorganic activity is expected to persist and if the company is currently active in the market for share buybacks. He also asked for more details on the fourth-quarter institutional trends, specifically areas of strength and weakness, and the demand for liquid alternatives.

Answer

George Aylward, President and CEO, stated that the company remains very active in evaluating potential inorganic opportunities, implying the discrete spend could continue. He reaffirmed share buybacks as a core element of their capital strategy, balancing it with other considerations. Regarding institutional trends, Aylward highlighted strength in emerging market debt, global REIT, and domestic REIT, particularly in non-U.S. institutional business, noting a variety of managers contributing to the pipeline. Mike Angerthal, CFO, added that the pipeline is across managers and geographies, including European and Middle Eastern teams.

Bill Katz asked if the discrete business initiative spend was concluded or expected to persist, and whether Virtus was back in the market for share buybacks. He also requested further details on the fourth-quarter institutional trends, specifically identifying areas of strength and weakness, and insights into general allocation trends, particularly demand for liquid alternatives.

Answer

George Aylward, President and CEO, stated that the company remains active in evaluating potential inorganic opportunities, implying discrete spend could persist. He affirmed that share buybacks remain a core element of their capital strategy, balancing it with other considerations. Regarding institutional trends, Mr. Aylward highlighted strength in emerging market debt, global REIT, and domestic REIT, noting that non-U.S. institutional business sometimes shows interest in strategies less favored in the U.S. market. Mike Angerthal, CFO, added that the pipeline is diversified across managers and geographies.

Bill Katz asked about the economic opportunity within AllianceBernstein's insurance business, specifically comparing it to Carlyle's involvement and inquiring about any delays or drivers behind the Ruby Re sidecar's extended timeline to 2026. He also questioned the credit quality in private credit, potential rate sensitivity, and implications for performance fees into 2026.

Answer

Onur Erzan, Global Head of Private Wealth, Alternatives and Distribution, explained excitement for the insurance asset management business, highlighting FCA REIT as a second sidecar investment with Carlyle and Asian insurers, synergistic with their Asia strategy. He confirmed Ruby Re is performing as planned with no delays. Seth Bernstein, President and CEO, clarified that Ruby Re's funding timing has not changed. Regarding private credit, Seth noted competitive environments, manageable maturities, and positive cash flow, expressing confidence in their position despite isolated credit deteriorations. Tom Simeone, CFO, added that declining rates could impact performance fees.

Bill Katz asked about the drivers of success in AllianceBernstein's private wealth business and the rate sensitivity of cash balances within that segment.

Answer

Onur Erzan (Global Head of Private Wealth, Alternatives and Distribution) attributed the strong Q3 performance (7%+ annualized net new assets growth) to record advisor productivity and reduced outflows. He stated that the private wealth business has very little sensitivity to rates regarding cash economics, as it represents less than 5% of total revenue, with a locked-in spread that protects against absolute fee level changes.

Represented by Robin Holby, Bill Katz asked about the addressable market for the new JABS ETF, the drivers behind improved investment performance, and the client profile and strategy for the firm's tokenized funds.

Answer

CEO Ali Dibadj described the JABS ETF as a client-led innovation, particularly for insurance clients like Guardian, designed to complement the floating-rate JAAA ETF. CFO Roger Thompson attributed the strong one-year performance improvement to a rebound in key US and global equity products. Regarding tokenization, Ali Dibadj explained that the primary clients are on-chain users, such as those holding stablecoins, who are seeking to earn a yield, with the firm aiming to stay ahead in disruptive financial technologies.

A representative for Bill Katz asked about the firm's fee rate dynamics, including the exit rate from Q1, trends in April, and the outlook for the rest of 2025.

Answer

CFO Jen Dardis explained that the Q1 effective fee rate decline was driven by two factors. Approximately 60% of the impact came from persistent structural shifts toward lower-cost vehicles like ETFs and CITs, and strategies like blend target-date funds. The remaining 40% was cyclical, caused by an AUM mix shift away from higher-fee equity assets due to market performance and flows. She noted the cyclical impact was more significant than typical this quarter and advised analyzing the fee rate over a multi-quarter period.

Inquired about the potential fundraising quantum for upcoming vehicles, specifically asking for more detail on the Newbury secondaries platform's traction. He also asked for an update on the retail accredited investor strategy, including products, AUM, and distribution efforts.

Answer

Fundraising momentum is building in flagship Workforce & Affordable Housing and Debt strategies. The Newbury secondaries platform is gaining traction through re-ups and by leveraging Bridge's broader client network, with fundraising expected to continue into 2025. The retail strategy is focused on a single triple net lease product and is expanding distribution channels beyond wirehouses to RIAs and independent broker-dealers.

Bill Katz from Citigroup sought to unpack the fiscal 2020 guidance, asking about the underlying interest rate assumptions for the net interest margin forecast and why the net new asset outlook was not increased.

Answer

CFO Steve Boyle clarified the guidance was based on one rate cut in March but provided sensitivity for further cuts. Regarding net new assets, President & CEO Tim Hockey explained they chose not to adjust the 7-10% range, calling it a conservative approach given it was only two weeks after the commission change, despite strong anecdotal trends.

Bill Katz from Citigroup asked for clarification on commentary about potentially being below the low end on pricing within the trading business. He also sought more detail on expense dynamics, questioning if operating leverage would primarily build in 2020 rather than the second half of the current year.

Answer

President and CEO Tim Hockey confirmed the competitive environment continues to put moderate pressure on commissions through customer-by-customer negotiations, despite stable headline rates. EVP and CFO Steve Boyle clarified that while they have levers to pull, the expense reduction will be a gradual grind, with the bigger impact on 2020 expenses rather than the remainder of the current fiscal year.

Bill Katz inquired about the expected behavior of deposit betas in a flat interest rate environment and questioned the pace of share buybacks during the fourth quarter's stock price decline.

Answer

CFO Steve Boyle stated he would be 'extremely surprised' if pricing on deposits changed in a flat rate environment, seeing rational behavior from customers and competitors. On capital management, Boyle attributed the buyback pacing to accounting and settlement timing of ASR and 10b5-1 plans, reaffirming comfort with their capital levels and guidance.