Alger Fund Holds StepStone Group Despite 6.4% Share Price Decline
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
stepstone-groupalger-weatherbie
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Alger Weatherbie Specialized Growth Fund reported maintaining its position in StepStone Group Inc. (STEP) in a filing dated 25 May 2026. The fund’s decision comes as StepStone shares declined 6.4% over the preceding month, underperforming the broader financial sector. This holding reflects a calculated conviction in the private markets asset manager’s long-term strategy and financial health.
StepStone Group operates as a leading global private markets investment firm, facilitating capital allocation for institutional investors. The firm’s performance is closely tied to the health of the private equity and venture capital ecosystems. Private markets have faced headwinds in 2026 due to higher interest rates and a sluggish environment for initial public offerings and mergers and acquisitions.
The Federal Funds Rate remains elevated at 5.25%-5.50%, pressuring fundraising and dealmaking activity across the private markets landscape. This high-rate environment has triggered a repricing of assets and lengthened the holding periods for portfolio companies. StepStone’s resilience is being tested as limited partners reassess their alternative investment allocations.
Alger Weatherbie Specialized Growth Fund’s strategy focuses on identifying companies with sustainable competitive advantages and strong growth trajectories. The fund’s decision to hold STEP signals a belief that the current market challenges are cyclical rather than structural. This stance contrasts with more cautious approaches from other asset managers who have reduced exposure to financial services in recent quarters.
StepStone Group’s stock closed at $42.18 on 24 May 2026, down from $45.08 one month prior. This 6.4% decline compares to a 2.1% gain for the S&P 500 Financials Index over the same period. The company’s market capitalization stands at approximately $7.2 billion based on the latest share count.
For its fiscal year ending 31 March 2026, StepStone reported assets under management (AUM) of $656 billion, a 12% year-over-year increase. Fee-related earnings grew 15% to $452 million, demonstrating the stability of its core business. The firm’s total AUM growth has consistently outpaced the industry average of 8% over the past three years.
| Metric | StepStone Group (STEP) | Industry Average |
|---|---|---|
| 1-Month Performance | -6.4% | -1.5% |
| YTD AUM Growth | +12% | +8% |
| P/E Ratio (FY2026) | 24.5x | 18.7x |
The firm’s price-to-earnings ratio of 24.5x trades at a premium to the asset management sector average of 18.7x. This valuation premium reflects investor expectations for above-average growth in fee-earning AUM and performance revenues. StepStone’s dividend yield is 1.8%, slightly below the sector’s 2.3% average.
The Alger fund’s continued investment in STEP suggests institutional confidence in the long-term secular growth of private markets. This could signal a bottom-forming process for other publicly traded private equity firms like Blue Owl Capital (OWL) and Apollo Global Management (APO). These firms may see renewed investor interest if StepStone’s AUM growth trajectory holds.
A potential risk to this outlook is a prolonged high-interest-rate environment that stifles private equity exit activity. If the Federal Reserve maintains restrictive policy through 2027, StepStone’s performance fee revenue could face significant pressure. The firm’s reliance on successful portfolio realizations makes it sensitive to IPO and M&A market conditions.
Hedge fund positioning data shows a net long bias on financial services stocks, but with significant short interest concentrated in smaller asset managers. Institutional flow data indicates steady accumulation of STEP shares by long-only funds, while hedge funds have been net sellers over the past quarter. This divergence highlights a clash between short-term trading and long-term investment horizons.
StepStone Group is scheduled to report its fiscal first-quarter 2027 earnings on 25 July 2026. Analysts will scrutinize metrics like fee-earning AUM growth and the pace of capital deployment. Any guidance revision on full-year performance fee expectations will be a critical catalyst for the stock price.
The next Federal Open Market Committee meeting on 24 June 2026 will provide crucial signals on the interest rate path. A dovish shift from the Fed could rapidly improve sentiment toward private market assets. Conversely, hawkish rhetoric would likely extend the pressure on StepStone’s valuation.
Technical analysts are watching the $40.50 support level for STEP, which has held twice in the past year. A decisive break below this level could trigger further selling toward $38.00. On the upside, resistance is firm at the 50-day moving average of $44.20. A close above this level would indicate a potential trend reversal.
StepStone generates revenue primarily through management fees, calculated as a percentage of assets under management, and performance fees, earned when investment funds exceed specific return hurdles. The firm’s fee-related earnings provide a stable base, while performance fees are more variable and depend on successful exits from private investments. This dual revenue model is common among alternative asset managers but requires scale and a strong track record to be profitable.
The Alger Weatherbie Specialized Growth Fund employs a growth-oriented strategy focused on small- and mid-cap companies demonstrating sustainable competitive advantages and above-average earnings growth potential. The fund’s managers conduct fundamental analysis to identify firms with innovative products, strong market positions, and capable leadership teams. Their decision to hold StepStone indicates a belief in the firm’s ability to manage current market volatility and capitalize on long-term private markets growth.
StepStone Group operates as a gatekeeper, designing and managing private market programs for institutional clients, while Blackstone is a direct investor and asset manager with a much larger scale. Blackstone’s market capitalization exceeds $150 billion, dwarfing StepStone’s $7.2 billion. StepStone’s focused model allows for specialization across geographies and asset classes, whereas Blackstone employs a diversified mega-fund approach. Both models have proven successful, but they target different segments of the alternative investment ecosystem.
Alger’s hold signals conviction in StepStone’s ability to outperform through the private markets cycle.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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