Buy Blackstone Group While It's Still Cheap

You may have heard of the Blackstone Group's (NYSE:BX) recent IPO. While most analysts caution against getting in on an IPO during the first few months for fear of the ship never getting out of port, in the matter of the Blackstone Group this advice is wholly unnecessary.

The Blackstone Group is a prominent global private equity firm, having plans for a $26B all-cash acquisition of Hilton Hotels Corporation (HLT), as well as making numerous deals valued at $370B in 2006 alone. Not only that, but take a look at these fundamentals:

1. Earnings yield of 41.67%, over 8x the 30yr US Treasury yield

2. Price-to-book ratio of 2.45, indicating a clear market undervaluation, as a comparable firm --Fortress Investment Group (NYSE:FIG)-- has a P/B of 53.08, which is in the range of biotechnology research firms and stratospheric compared to the industry average of 4.54--

3. Return on investment is 53.08% --Fortress' ROI was not available for comparison!

4. Operating margin of 94.10%, meaning that Blackstone is INCREDIBLY efficient at it's operations, turning $1.00 of revenue into $0.9410 of profit --Fortress turns $1.00 of revenue into a paltry $0.3416 of profit--

With the current economic expansion, corporations are going to need funding for expansion and growth. With Schwarzman's and Peterson's proven track record, Blackstone is primed for the challenge.

Buy this stock while it's still cheap at 2.4x earnings, or somebody else will!!!

BX 1-mo chart

Disclosure: none

Comments

[phdinsuntan...:]

if a Democrat wins the White House in 2008, billion dollar companies like BX could see taxes that will go through the roof.

2007 Jul 18 06:43 AM

[williammeehan:]

If a Democrat wins the White House in 2008, I don't expect much to happen. Cramer says "Don't bet against these guys, just don't buy when they are selling." Of course, when nobody's looking Cramer will be buying BX. He's a very clever guy, and probably has locked horns with the BX guys at one point. Yeah, you know how it is. All it takes is Schwarzman and Peterson buying Cramer a nice steak dinner and he'll change his tune. Or how about a nice golf game? The most important deals are made on the golf course. As for the Democrats and Republicans. I'm neither cause both parties are controlled by the same puppet masters. Remember the little old man behind the curtain in the Wizard of Oz. Think outside the box. Blackstone Group is a BUY.

2007 Jul 19 03:26 PM

[jon edwards:]

this is a joke right?

2007 Jul 18 12:13 PM

[Douglas Per...:]

Who are you responding to, me or carlos?

2007 Jul 18 03:24 PM

[Long-Short Guy:]

Failed Orbitz IPO?
<blockquote>
<b>Investors Turn Up Noses At Blackstone's Orbitz</b>

Weaker-than-expected demand for Orbitz shares meant the IPO priced below the anticipated range of $16 to $18 a share, set by Morgan Stanley and Goldman Sachs Group Inc.

IPO analysts warned investors of red flags, noting Orbitz's precarious financial position and the fact it won't retain any of its IPO proceeds.

"Orbitz went public with a weak income statement," said Francis Gaskins, president of research site IPODesktop.com. "Typically you would have thought they [Blackstone] would have waited for the income statement to get better."
</blockquote>

Source:
online.wsj.com/article...

2007 Jul 22 08:43 AM

[Douglas Per...:]

That's an anomaly. They happen. Bankers make mistakes.

2007 Jul 22 11:08 PM