Invest Like the Best with Patrick O'Shaughnessy: John Zito - Inside Apollo (EP.426) Summary

Release Date: June 3, 2025

In Episode 426 of "Invest Like the Best," host Patrick O'Shaughnessy engages in an insightful conversation with John Zito, Co-President of Apollo Global Management. The discussion delves into how Apollo has transformed into a pivotal financial institution, the convergence of private and public markets, innovative investment strategies, cultural dynamics within Apollo, and future outlooks in capital markets.

1. Introduction to Apollo’s Evolution

Patrick opens the conversation by highlighting Apollo's significant growth and its understated influence in the financial sector. He emphasizes the rarity of discussing such a transformative firm and sets the stage for an in-depth exploration.

Notable Quote:

"Apollo is one of the emerging most important financial institutions. I don't think people appreciate how it works."
— Patrick O'Shaughnessy [05:16]

2. State of Capital Markets

John Zito provides a comprehensive overview of the current landscape in capital markets. He reflects on his career's inception when trading loans was unconventional and contrasts it with today's expansive $800 billion asset management scale. Zito underscores the generational shift in how capital is sourced and utilized, particularly emphasizing the integration of long-duration liabilities like annuities with infrastructure projects.

Notable Quote:

"We're building effectively a more merchant-focused, principal-focused, not agent-focused asset manager."
— John Zito [07:20]

3. Apollo’s Strategic Merger with Athene

A significant portion of the discussion centers on Apollo's merger with Athene, which brought nearly half of Apollo's balance sheet under management. This strategic move aligns Apollo's interests with its clients by positioning itself as both an asset manager and a principal investor, ensuring long-term alignment and fostering trust.

Notable Quote:

"We're aligned with effectively a very large first loss position in our retirement service business."
— John Zito [07:35]

4. Innovation in Asset Management

Zito elaborates on Apollo's innovative approach to asset management, highlighting the creation of Ridgeline—a comprehensive operating system for investment managers. Ridgeline integrates trading, portfolio management, compliance, and AI-driven tools, setting Apollo apart from competitors by offering real-time, integrated solutions.

Notable Quote:

"Ridgeline has created a comprehensive cloud platform that handles everything in real time."
— Patrick O'Shaughnessy [04:05]

5. Cultural Dynamics and Leadership

The conversation shifts to the internal culture at Apollo. Zito emphasizes a meritocratic environment where accountability is paramount, and hierarchical barriers are minimal. This culture fosters innovation and encourages team members to take ownership of both successes and failures, contributing to Apollo’s dynamic and resilient organizational structure.

Notable Quote:

"We have a culture of wanting the issuer to do business with you again."
— John Zito [20:45]

6. Investment Strategies and Product Innovation

Zito discusses Apollo's diversified investment strategies, which span investment-grade credit, private equity, secondaries, and hybrid products. He highlights Apollo's ability to innovate within these sectors, such as structuring long-duration investment-grade products that align with Apollo's own balance sheet, thereby creating unique investment opportunities for clients.

Notable Quote:

"We can create systems that give you bad advice too. So you want to make sure that it's creating it under the framework that you acknowledge."
— John Zito [65:05]

7. Noteworthy Deals: Carvana and Hertz

Zito recounts two landmark deals that exemplify Apollo's strategic acumen:

• Carvana: Apollo navigated a volatile position with Carvana, managing to turn a significant loss into a profitable outcome by leveraging deep industry relationships and flexible capital structures.

• Hertz: Apollo's involvement with Hertz showcased their ability to provide comprehensive financing solutions during distress, ultimately facilitating Hertz's successful restructuring and exit from bankruptcy with substantial returns.

Notable Quote:

"We were able to get 90% of the bonds on board. They launched this exchange, the exchange gets blocked."
— John Zito [57:07]

8. Future Outlook and Capital Markets

Looking ahead, Zito predicts a continued integration of private and public markets, driven by increased liquidity and innovative financial products. He anticipates the rise of secondary marketplaces and private asset exchanges, facilitated by advancements in blockchain technology and tokenization. Apollo aims to lead in financing major sectors like AI infrastructure and defense, positioning itself to capitalize on emerging opportunities.

Notable Quote:

"We have a big balance sheet to be able to commit fast. And we do it in a way that it's because we have."
— John Zito [63:18]

9. Building and Maintaining Relationships

Zito underscores the importance of trust and long-term relationships in the credit markets. He shares anecdotes demonstrating how personal connections and transparent communication have enabled Apollo to navigate complex deals successfully, fostering collaborative environments where all parties benefit.

Notable Quote:

"In credit, you have to be able to agree that sometimes one plus one is three."
— John Zito [60:19]

10. Culture and Personal Reflections

The episode concludes with a discussion on maintaining Apollo's unique culture amidst rapid growth. Zito highlights the importance of fostering an environment that values creativity, accountability, and continuous improvement. He shares personal anecdotes that illustrate the company’s commitment to a supportive and engaging workplace.

Notable Quote:

"We have one of the smartest, most strategic leaders in the marketplace and that really powers the culture of the place."
— John Zito [42:33]

Key Takeaways

• Strategic Mergers: Apollo's merger with Athene has redefined its asset management approach, aligning interests with clients and enhancing capital utilization.

• Innovation: Development of platforms like Ridgeline demonstrates Apollo's commitment to technological advancement and operational excellence.

• Cultural Strength: A meritocratic and accountable culture fosters innovation and resilience, enabling Apollo to navigate complex market dynamics.

• Diverse Investment Strategies: Apollo's multifaceted investment approach, including investment-grade credit, private equity, and hybrid products, positions it uniquely in the market.

• Future Leadership: Apollo aims to lead in emerging sectors such as AI infrastructure and defense, leveraging its extensive capital resources and innovative strategies.

Final Thoughts

John Zito's insights reveal Apollo's evolution into a versatile and influential financial powerhouse. The firm's strategic mergers, innovative platforms, and strong cultural foundations have positioned it to navigate and lead in the ever-changing landscape of global capital markets. This episode offers invaluable perspectives for investors, financial professionals, and business strategists seeking to understand the mechanisms behind Apollo's success and its future trajectory.

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