CG The Carlyle Group Inc. Common Stock : Bullish and Bearish Analyst Opinions

1. FACT: There is a growing reassessment of private credit exposure, with alternative asset management stocks facing distribution issues. 2. BRIDGE: If the current energy shock forces central banks to maintain higher rates (stagflation), the economy will slow down. This will trigger a "snowball effect" where investors demand liquidity from private credit funds. Because these funds hold illiquid assets, a rush for the exits will severely pressure the balance sheets and fee structures of alternative asset managers. 3. VERDICT: WATCH. Alternative asset managers are highly vulnerable to a stagflationary environment where credit quality deteriorates and LPs demand distributions. 4. KEY RISK: A soft landing where inflation cools without a recession, allowing private credit markets to continue operating without liquidity crunches.

Private credit is in relatively good shape. A relatively small percentage of them have had any default issues. I don't really think there's a big problem right now in private credit default ratios. The broader market is overly fearful of systemic defaults in private credit, specifically regarding software loans. Because these portfolios are actually resilient and a near-term recession is not expected, major alternative asset managers will continue to collect strong yields and management fees without suffering the massive write-downs the market is pricing in. LONG alternative asset managers with heavy private credit exposure, capitalizing on the disconnect between market fear and actual portfolio performance. An unexpected, severe economic recession could trigger the exact wave of defaults and liquidity stress that the market is currently fearing.

"Private equity firms are stuck with assets that are now going on kind of seven years... Secondary funds have the ability to step in and really capitalize on this current dynamic." The "Liquidity Crunch" in private equity forces GPs and LPs to sell stakes at discounts. The largest players in the Secondaries market (Blackstone's Strategic Partners, Carlyle's AlpInvest, Ares' Landmark, KKR) are the buyers of choice. They get assets at a discount and are the solution to the industry's liquidity problem. Long the alternative asset managers with dominant Secondary platforms. A severe recession could mark down the underlying portfolio values (NAV) of the assets they are buying, regardless of the entry discount.

Rogers identifies Financial Services as undervalued. Specifically names Carlyle (CG) as trading at ~10x earnings with less software exposure than peers. Names Lazard (LAZ) as a beneficiary of M&A/Spinoff activity. Names JLL for real estate complexity. The market hates financials due to rate fears and commercial real estate panic. However, M&A is rebounding (Lazard), and private equity firms that avoided the software bubble (Carlyle) are mispriced relative to their earnings power. LONG Value Financials. M&A cycle stalls; commercial real estate collapse deepens.

Rogers calls Financial Services "extremely cheap." He explicitly praises Lazard (LAZ) for M&A potential in a deregulated environment and Carlyle (CG) as oversold due to exaggerated private credit fears. Rogers believes the Trump administration (implied by "deregulated environment") will fuel deal-making. If rates come down (which he predicts the Fed will do to please the President), M&A activity explodes, directly benefiting advisory firms like Lazard and asset managers like Carlyle. LONG. A contrarian value play against the tech-heavy index. A "small recession" at year-end (which Rogers predicts) could freeze deal flow.

Carlyle is raising "$200 billion" and targeting "$2 billion of fee-related earnings." The firm is successfully pivoting under new leadership (Harvey Schwartz) to capture the private credit and wealth channel boom. The ambitious targets are being viewed as a "credibility test" that the market is currently buying into. LONG CG. Failure to meet fundraising targets or a credit event in the private markets.

Schwartz states, "The demand for capital is going up in all forms... everyone is focused on economic growth and reindustrialisation investing in national security." He notes that governments are constrained by high deficit levels. When capital demand rises (re-industrialization) but traditional government funding is capped by deficits, the gap must be filled by Private Capital. This creates a structural tailwind for Alternative Asset Managers (Alts) to deploy capital and earn fees, regardless of short-term market sentiment. LONG Private Equity/Credit managers who facilitate this capital transfer. A severe recession curbing deal flow or a regulatory crackdown on private credit.

Alternative asset managers are in 30-40% drawdowns (e.g., Blackstone down 42% from highs). Sentiment is at rock bottom due to fears over private credit valuations and "hidden cockroaches." Michael argues these are "illustrious" firms with massive staying power (Blackstone is the "BlackRock of Private Equity"). The market is pricing in a 2008-style collapse, but actual distress is not yet visible in the data. He views this as a sentiment disconnect. Long the top-tier Alternative Managers as a contrarian value play. (Michael explicitly bought BX and owns CG). Actual systemic credit events or fraud (like the "cockroaches" Jamie Dimon warned about) could validate the sell-off.