Rowan criticizes managers with 30% portfolio concentration in a single industry being disrupted by technology.
“If 30% of your portfolio is in one industry and that one industry is being impacted by technology, you have not been a good risk manager.”
Rowan states the 30% overhang from geopolitics, inflation, and tech change was foreseeable and predictable.
“I think the 30% overhang of geopolitics inflation technological change is now here. It was foreseeable, not maybe exactly how it occurred, but it was foreseeable. It was predictable.”
Rowan says Apollo focused on first lien, cash pay loans to large companies with low leverage.
“And there are companies of which we are one, but not the only one who went all first lien, who went almost all cash pay, who went large companies, who work with low leverage.”
Rowan predicts good risk managers will make record profits this year and next from defensive positioning.
“If you were a good risk manager, you are going to make more money this year and next year if it continues than you ever have before because you've been risk off.”
“That felt really good on the way up. That's not going to feel so good on the way down.”
Rowan criticizes managers who only recently realized AI threatens enterprise software, calling it foreseeable.
“If you discovered eight weeks ago that enterprise software was vulnerable to AI, you kind of weren't doing your job. This is this is knowable, and we're we're seeing, this technology shift”
Rowan says Athene's exposure to levered lending is 0.4% and software exposure is 0.1%.
“Our exposure to levered lending, which people sometimes call private credit is de minimis. Rounds closer zero than to 1% came in at 0.4%. Our exposure to software, 0.1%.”
Rowan says Apollo avoided single-asset AI bets, instead spreading across positions with structures creating convex upside and downside protection.
“We have spread across with the right structures and the right protections with the right risk reward to kind of create convex convex upsides while getting some amount of downside protection and some notion of our money back.”