Blackrock Cleans Up Florida; Its Role Will Grow as Economy Worsens

I do not currently hold Blackrock (BLK), but have in the past - when the rumor mill started that Merrill Lynch might swoop in and carry off their fantastic CEO I did end up selling the position, but now that this won't happen, this excellent company with top notch management is definitely of interest once more. It is hard to find 'safe' financials in this market but this, along with Mastercard (MA) are two I really am behind [Rock on Blackrock]. Charts for both are excellent.

An interesting article from MSN on the company below. Much like the consulting stocks I have added recently due to potential for a wave of 'restructurings' in 2008 [2 New Recession Plays], it appears Blackrock can also benefit from the turmoil.

• The U.S. credit market turmoil is battering the financial sector but is proving to be a bonanza for money manager BlackRock Inc , which, with its deep fixed income roots, has assumed the role of clean-up king.
• Florida officials accepted BlackRock's offer to keep a $14 billion investment pool for local governments afloat by isolating $2 billion of the fund's worrisome holdings and restrict withdrawals. BlackRock's appointment as an interim administrator to the Florida fund comes as it tries to become the lead manager for a roughly $75 billion fund being created by America's three biggest banks to support the asset-backed securities market.
• "They've got long-standing expertise in risk management and fixed income and in managing portfolios of complex structured products. People hire them for their expertise and experience in doing that," said Robert Lee, analyst at Keefe, Bruyette & Woods.
• Last week, BlackRock affiliated firms invested $100 million in notes of E*Trade Financial Corp and picked up a 1.14 percent equity stake in the discount broker as part of a $2.55 billion cash bailout of E*Trade by hedge fund firm Citadel Investment Group. Lee of Keefe, Bruyette & Woods saw the move as "opportunistic."
• BlackRock began as a bonds shop 19 years ago under co-founder Laurence Fink but has diversified over the years into equities and alternative investments. Fink began his career in 1976 as a bond trader in First Boston, where he was one of the earliest proponents of mortgage-backed securities.
• About 40 percent of the firm's assets are in fixed income, 35 percent is in equities and balanced products and 22 percent is in the money markets area. Merrill owns a 49 percent equity stake in BlackRock and is also its largest client. BlackRock has generally invested very conservatively, steering clear of subprime mortgages and riskier assets, but has been eager to benefit from opportunities. It raised $2.9 billion in a credit fund launched in August and plans more funds to benefit from the troubled markets.
• But a stern test for the firm awaits in the form of the bank-sponsored fund, details of which are expected to be announced soon. BlackRock declined to comment on its role in the fund but some analysts felt it was a logical choice to lead-manage it given its large money markets presence. Wachovia Capital Markets wrote in a note last week that mandate could bring in $150 million in revenue for BlackRock in 2008 and add 3 percent to 4 percent to earnings.

So obviously Blackrock has their hands in everything... and this could only grow as things worsen (despite 'interventions' the mess is bigger than what can be 'saved' - this will come out over time). I will be looking to add Blackrock back to the portfolio on the next pullback, as I position the fund for a rocky 1st half 2008. The market can rally all it wants on hopes and dreams of the Fed, but corporate earnings are going to be the blast of reality down the road. Timing it all is the tricky thing (euphoria from Fed cuts, to reality from earnings season/guidance for 2008).

Disclosure: Long Mastercard in fund; no personal positions

Comments

[petecoves]

I find it surprising the you mention mastercard, Chart on most stock look fantastic right before the implode. I'm sure Lucent had a prety good lookng chart at onetime.

However, I would beg to differ where mastercard is going.
At this point in time mastercard maintains an extremely vulnerable fundamental and technically.

First fundamentals:
Mastercard trades : price to sales of 7 (avg S&P co. is 1.5)
PEg ratio 2 - anything over 2 is considered dagerous.
Price to cash flow: 33
Huge Insiders selling incuding Goldman Sachs.

Potential damaging litigation From AXP for 3 Billion dollars
EU Commission looking to eliminate interchang-fees altogether which could translate into billions of dollars in lost revenue.

US congrees fighting to lowe fees and revamp entire system.

Technically RSI at 70 - considered overbought condtion
broke a new high, however closd below it previous new high - negative divergence.
Climatic Top Pattern