After the sharp decline, Morgan Stanley believes some alternative investment firms have a good entry opportunity
After a sharp drop in the stock prices of the largest alternative investment firms and business development companies (BDCs) on Wall Street on Tuesday, Morgan Stanley analyst Michael Cyprys stated that although some portfolio companies "may face risks of disruption from artificial intelligence (AI), it also presents opportunities for others."
"The portfolios are highly diversified, and some investments may benefit from AI," Cyprys wrote in the report, adding that high-quality, diversified alternative assets currently present a favorable entry opportunity.
He pointed out that in the context of diversified portfolios, since 2020, IT services have accounted for an average of about 23% of private equity (PE) deal value across the industry and about 16% of deal volume, with the software sector being one of the subsets.
Among the companies covered by Morgan Stanley, tech services-related deal volume accounts for about 21% of overall PE deal volume, with TPG, Carlyle, and KKR slightly higher, and Apollo Global Management the lowest.
"There could be some major winners in the portfolio who benefit from AI, with the potential to unlock or accelerate growth and improve efficiency, and the gains from these winners could even outweigh the drag from other poor investments."
Editor: Ding Wenwu
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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