July 29, 2022

On Blue Owl

 

In May, OWL held its annual Investor Day. Three things stand out about its presentation.

The first is how much growth is on the table. In 2021, Blue Owl had $900 million in fee-related revenues. By 2023, it expects to double that to $1.8 billion. In terms of after-tax distributable earnings, it plans to double them as well, to $1.0 billion in 2023 from $523 million in 2021. Lastly, it wants to boost its annualized dividend by 40 cents per share (where it was in Q4 2021) to $1 per share in 2023.

The second highlight is how much of an impact fee-related revenues have on its profitability. These revenues have 60% margins. In other words, Blue Owl's distributable earnings are completely driven by fee-related revenues.

Lastly, with just 23% of its investor base outside North America, its global expansion is in the early stages with much growth to come in the years ahead.

With its goal to raise more than $50 billion in fee-related AUM over the next 18 months, there's no question growth is on the table for the foreseeable future. That's what makes OWL one of the best mid-cap stocks for the rest of 2022 and beyond.

 

Glenn Schorr, an Evercore ISI analyst, reiterated his positive view of Blue Owl’s all fee-related earnings and all permanent capital model.  “We continue to like OWL’s quality of earnings/stability of results, a growing yield & best-in-class FRE margins, while also getting exposure to the fast-growing alts space,” Schorr said in a July 20 note. He has an Outperform rating for the stock and a $13 target price. 

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