7 Reasons Why Blackstone Is a Buy Here

As I mentioned in my previous article about why an investment in ICICI (IBN) is better than investment in Blackstone (BX), after about 4 weeks of these $ 4 Billion IPOs, the markets are exactly conveying the same message.

ICICI stock is up about 10% from its offering price whereas Blackstone is down by about 12 % from its offering price (and about 30% down from its first day's closing price). Now that Blackstone's stock has come down so much, here are 7 reasons why it's a good time to take position in this blue chip private equity stock:

1. Blackstone is enormously profitable
2. It has excellent properties like Equity Office, La Quinta and Hilton Hotels (when completed) in its portfolio
3. Orbitz IPO came to market and even after IPO, Blackstone will own about 56% of this company which it can offload in market in future. With Expedia trading near 52-week high, Orbitz IPO is expected to do reasonably well
4. The world is swimming in liquidity and there are bigger and bigger deals being announced. When it comes to managing money, Blackstone has proved that it is one of the best managers around
5. With the Chinese government investment, it's just matter of time before Blackstone starts announcing major deals in Chinese market
6. There are quite a few talks about taxing private equity and hedge funds. However as long as Mr Bush is president, nothing is going to change as far as taxes are concerned, which is good for Blackstone. After few more weeks, there will be other hot topics in politics and this tax issue would be conveniently forgotten
7. There are very few (just two) private equity money manager companies trading publicly. When KKR goes public, markets will realize the value in Blackstone stock (by comparison). Blackstone's first quarter results should also give a boost to its stock

Disclosure: Author is long BX

Comments

[Douglas Per...:]

Have you read my article on Blackstone, "Buy Blackstone Group While It's Still Cheap"?

2007 Jul 23 12:15 PM

[raymond zhou:]

The major reason that NBA owns Yao is becasue of the huge Chinese viewer market,
SIC has lost big money on BX on book value, will other Chinese money load while BX is low?
This might be a million question.

2007 Jul 23 12:29 PM