Apollo Global higher as Morgan Stanley pulls sell recommendation

• Morgan Stanley's thesis that cash earnings would decline as Apollo Global (APO +1.5%) neared the end of its harvesting cycle played out in Q1, with the P-E business contributing just $0.13 per share in net realized performance fees (vs. the $1.08 peak in 2013 Q2).
• With the stock underperforming by 1,900 basis points in 2015, things could be bottoming out, says Morgan, upgrading to Equalweight from Underweight.
• If the shares were going to go much lower, says Morgan, they would have already done so given management stock sales and the weakest results in nearly three years.
• "Faster deployment in Fund VIII won't benefit near-term cash earnings, but it could boost or pull forward the start of APO's next harvest and the meaningful inflection point in cash earnings we expect in 2018."