Apollo Global Management (NYSE: APO) has seen its stock price fall roughly 15% in recent weeks following a significant index reshuffling event.
The alternative asset manager was removed from the Russell 1000 Growth Index as part of the annual reconstitution that took effect on June 26.
Russell’s reconstitution algorithms determined that Apollo no longer exhibited the characteristics of a growth stock, reclassifying it as a value stock instead.
As a result, Apollo was moved into the Russell 1000 Value Index, triggering waves of forced selling from major growth-oriented funds.
The stock is now trading at around $120 per share, down approximately 18% year to date, as large growth ETFs offloaded their positions.
Apollo was ejected from the $127 billion iShares Russell 1000 Growth ETF (NYSEMKT: IWF) and the $44 billion Vanguard Russell 1000 Growth ETF (NASDAQ: VONG), both of which are substantial holders.
The stock was subsequently added to the $81 billion iShares Russell 1000 Value ETF (NYSEMKT: IWD) and the $20 billion Vanguard Russell 1000 Value ETF (NASDAQ: VONV).
However, the two value ETFs combined hold nearly $75 billion less in assets than the two growth ETFs, meaning the buying pressure from the addition did not offset the selling.
Despite the index-driven sell-off, Apollo’s underlying business fundamentals remain strong, pointing to a potential buying opportunity for long-term investors.
In the first quarter, Apollo reported record fee-related income of $728 million, a 30% year-over-year increase, while adjusted net income rose 8% to $1.2 billion.
Wall Street analysts project 21% revenue growth for Apollo in 2026 and 14% growth in 2027, with earnings expected to climb 6% this year and another 20% in 2027.
One additional concern weighing on the stock was a June 22 Securities and Exchange Commission filing revealing that Apollo was capping redemptions at 5% for its flagship Apollo Debt Solutions fund.
Redemption requests had reached 16.8% of the fund, driven by heightened investor concerns about potential stress in the private credit market, marking the second consecutive quarter Apollo imposed such caps.
On a valuation basis, Apollo currently trades at 13 times forward earnings, a relatively modest multiple that reflects the temporary dislocation caused by the index reconstitution rather than any deterioration in business performance.
Approximately 73% of Wall Street analysts rate the stock as a buy, with a median price target of $150 per share, implying around 25% upside from current levels.
