Blue Owl Capital, Inc. (OWL) started trading on the NYSE last May; it was formed with the combination of Owl Rock Capital Group, Dyal Capital Partners, and Altimar Acquisition Corporation, explains income specialist Tim Plaehn, editor of The Dividend Hunter.
Altimar was a special purpose acquisition corporation (SPAC) that provided the shell company under which Owl Rock Capital and Dyal Capital combined to become a publicly traded corporation quickly. Dyal Capital invests in minority stakes in private equity companies.
The name Owl Rock may be familiar. Owl Rock Capital Group manages Owl Rock Capital Corp. (ORCC), a publicly traded business development company (BDC). I like the name change to reduce the confusion between the money management company and the BDC. Besides managing publicly traded ORCC, Owl Rock Capital Group operates several private BDCs.
The combined company sports a $12 billion market cap. A recent presentation shows a total of $70 billion of assets under management. The third-quarter earnings presentation highlighted the company’s forecast of 46% annualized earnings growth for 2021 through 2023.
Blue Owl has big dividend plans. The company expects to have a 60% to 90% payout ratio. From the post-merger presentations, management stated that they seek to grow earnings and dividends by more than 18% compounded annually through 2023. It appears that by the end of the third quarter, those projections had more than doubled. The company declared a third-quarter dividend of $0.09 per share, which gives a current yield of 2.4%.
The OWL share price has been volatile since the May 2021 SPAC merger. As of this writing shares trade near the midpoint of the $12 to $18 trading range for the last seven months. The question is whether OWL can live up to its projections. It’s a brand-new investment management company with only one quarter as a publicly traded stock under its belt.
As of the end of 2021, Blue Owl appears on pace to meet those growth goals. In October, the company agreed to purchase Chicago-based Oak Street Real Estate Capital for $950 million. In December, the company acquired Ascentium Group Limited to establish its physical presence in Hong Kong, strengthening its presence in the Asia-Pacific region.
The investing public has not yet become aware of Blue Owl Capital, which is on its way to becoming a powerhouse asset manager. Don’t be surprised if OWL posts a 100% total return in 2022.
