IN TODAY'S SOUR ECONOMY, A LEVERAGED FUND INVESTED in leveraged buyouts could well mean double trouble. Just ask Leon Black and his partners in Apollo Management, whose AP Alternative Assets has performed disastrously. Its European-listed shares (AAA.Euronext) have plunged to about $1 each from an initial offering price of $20 in 2006.
AP Alternative Assets' net asset value fell 45% in the fourth quarter, to $850 million, or $8.77 a share, capping a 60% decline for the full year. The drop reflected the declining value of many of the fund's investments in Apollo-engineered leveraged buyouts completed in 2006, '07 and early '08. Apollo orchestrated some of the worst LBOs in the buyout boom of recent years, including the privatizations of debt-laden Harrah's Entertainment, the casino operator; Claire's Stores, a costume-jewelry retailer; and Realogy, a real-estate broker.
