Market turmoil has hurt shares in private equity firms. Why it’s time to buy.

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This year’s market downturn has hurt the shares of publicly traded private equity firms, but also the group, including

TPG

and

Carlyle group
,

ultimately expected to benefit from the disruption.

The second quarter was particularly tough. Alternative asset manager shares are down an average of 25% since April 1 through Friday’s close, Brian McKenna, an analyst at JMP Securities, a Citizens company, said in a statement Tuesday.

So far this year the holdings –

Apollo Global Management

(ticker: APO),

Ares administration

(

ARES

),

Black Stone

(BX),

Carlyle group

(CG),

KKR & Co.

(KKR),

Capital of the blue owl

(OWL) and

TPG

(TPG) — are down an average of 33%, McKenna said.

Alternative wealth managers’ lackluster performance in 2022 is consistent with broader market trends and other financial services stocks, McKenna said Barrons. He pointed to them

S&P500,
which was down 19% for the year as of Friday. “With this in mind, the group will outperform on good days and underperform on bad days, like last week. It’s really the broader tides [of] the market,” he said.

While merger activity has slowed this year, private equity deal completion held up in the second quarter, with volumes up more than 50% from the first quarter, McKenna said.

For example, TPG made more than 20 investments this year. The PE firm teamed up with Clayton, Dubilier & Rice, also a private equity firm, in May. Buy Covetrus (CVET).an animal health company, for $4 billion.

TPG was also part of a consortium led by Insight Partners, who invested in Kaseya’s $6.2 billion purchase of Datto (MSP)., a provider of security and cloud-based software, in April. Last week, TPG has invested in Little Leaf Farmsa supplier of packaged lettuce.

On Tuesday, TPG said that was the case Purchase of Convey Health Solutions Holdings (CNVY), a healthcare technology company, for $10.50 per share, or $1.1 billion. Convey, which went public last year, helps government-sponsored health plans manage benefits for their members. The transaction is expected to close in the second half of the year.

News of the deal sent Convey shares up 139% on Tuesday, while TPG shares rose about 2% in afternoon trade.

TPG’s shares have remained subdued since the company went public in January, completing its largest IPO so far this year when his bid raised $1 billion. The stock has remained largely below its asking price of $29.50 since April.

Carlyle Group stock is down about 46% from its 52-week high of $60.14 in November

Black Stone

is 31% below its high for the year of $63.62 in February.

Apollo

dropped to a low of $46.70 last week but has bounced back to trade at $50 on Tuesday.

Credit-focused companies like Ares and Blue Owl outperformed some of their peers earlier this year, but their shares are now down too, McKenna said. (Ares is down 37% from its yearly high of $88.84 in November, while Blue Owl is down 42% from its 52-week high of $17.86 in November.)

While their shares may have fallen, the group of public alternative wealth managers is expected to benefit from the current broad market dislocation, McKenna said, noting that the group has more than $500 billion in available capital they are deploying be able.

“We expect a really robust deployment cycle over the next few quarters as these companies look to put money to work. When you experience the sharp declines and volatility, these private equity firms step in, and this is where significant value is created over the long term [limited partners] and shareholders,” he said.

Write to Luisa Beltran luisa.beltran@dowjones.com