How Has Apollo Disappointed Investors? Let Us Count The Ways...
When I ask sources "What firm has been battered the worst by the economic mess," I almost always get the same answer: Apollo Management. To better understand why that is, I've created a list of the firm's recent failures, broken down into strategy missteps and ugly deals. On Strategy: 1. Apollo companies are the most active PIK-togglers. Seven of Apollo's portfolio companies have toggled their PIKs and another four have the option to do so. According to a list made by Buyouts' Ari Nathanson, that is by far the most PIKs for any one sponsor. Toggling a PIK substitutes debt payments with more debt, and the move is largely seen as prolonging the inevitable, and a bad sign in a credit crunch. Among them: Berry Plastics, Claire's Stores, Metals USA Holdings, Momentive Performance Materials, Realogy, Rexnord Holdings and Harrah's. See a full chart here. (sub req.) 2. Apollo missed the bottom on distressed debt. In March, the firm began aggressively buying up leveraged loans that they viewed as undervalued, including bonds of their own portfolio companies. At the time, loans were trading at unprecedented low prices averaging
