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Robinhood Is Underweighted by Barclays in a Note That Is Positive for Brokers and Asset Managers

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Robinhood Markets (NASDAQ:HOOD)

Even though he has an overall optimistic opinion of the U.S. broker, asset management, and exchange sectors, Barclays analyst Benjamin Budish started covering Robinhood Markets (NASDAQ:HOOD) as his single Underweight rating. In Wednesday’s premarket, HOOD stock decreased 1.1%.

He rates Ares Management (NYSE:ARES), Apollo Global Management (NYSE:APO), Blackstone (NYSE:BX), Interactive Brokers (NASDAQ:IBKR), and P10 as Overweight (NYSE:PX). Coinbase Global (NASDAQ:COIN), Charles Schwab (NYSE:SCHW), and StepStone Group are considered Equal Weight names (NASDAQ:STEP).

In a note to clients, Budish stated: “We see the strongest secular trends in the alternative asset management industry, where we think institutional and retail allocations remain low and the business models function well in all conditions.”

The firm’s customer base is “expected to see the largest negative impact from macros vs. competitors,” despite the analyst praising Robinhood’s (NASDAQ:HOOD) tech stack, product innovation, design/user experience, and goal. Concerns about Robinhood’s upcoming recruiting and product introductions have also been raised by recent layoffs.

Regarding the Overweight names, Budish believes that the relationship between Apollo (NYSE:APO) and Athene insurance is “underappreciated by the Street” and that it will continue to strengthen as Griffin Capital closes and Apollo Aligned Alternative launches.

Given the fundraising cycle, impending realization from European waterfall funds, and fee activation on AUM/deployment of dry powder, Ares Management ((NYSE:ARES) has a “strong runway for development.”

Blackstone (NYSE:BX), is the market leader with a proven track record of AUM growth and investment performance. Credit and real estate sectors, in his opinion, are particularly well-positioned for any macroenvironment, according to Budish.

StepStone (NASDAQ:STEP) plays a special role in assisting limited partners in their financial decisions, has access to unique data thanks to its connections within the sector, and has a strong fee-related earnings profile that “warrants a premium multiple.”

According to Budish, P10 (NYSE:PX) stands out among publicly traded alternative stocks due to its concentration on more fragmented lower-middle markets and its cooperation with Crossroads, which improves ESG and brings retail flows and permanent capital.

Featured Image-  Megapixl @Selagin

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