Schwarzman: Blackstone deservers far higher valuation


An incredulous Stephen Schwarzman (on the earnings call) asks why Blackstone (BX +4.7%) trades at a 50% discount to traditional asset managers when it's growing AUM at 4x the pace (28% vs. 7%) and has a distribution of 6% vs. 2.8%.

In my experience, says Schwarzman, these sorts of inefficiencies get corrected over time, and Blackstone will trade at or above the valuations of the traditional managers to the great benefit of its shareholders.

Speaking earlier on a call with reporters, COO Tony James on the current buyout environment: "It's frustrating for our guys going after things and keep getting outbid."

Earlier: Blackstone's Q4 results fly past estimates

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Comments (10)
  • idkmybffjill
    , contributor
    Comments (1911) | Send Message
     
    Schwarzman, put your money where your mouth is and buy back stock if you think it's undervalued!!
    30 Jan 2014, 11:51 AM Reply Like
  • mostserene1
    , contributor
    Comments (3692) | Send Message
     
    Long BX and thrilled.
    30 Jan 2014, 12:04 PM Reply Like
  • agliata
    , contributor
    Comments (142) | Send Message
     
    Sorry I missed the opportunity to add to my position at the under 30 mark the other day.
    30 Jan 2014, 12:38 PM Reply Like
  • DAG Investments
    , contributor
    Comments (4132) | Send Message
     
    Right on schedule for my first price target ($34) ... got a full article coming soon, but in the meantime, my current price target is here: http://seekingalpha.co...
    30 Jan 2014, 02:37 PM Reply Like
  • storm13
    , contributor
    Comments (8) | Send Message
     
    I too wish I had added to my position on the drop below $30. Feeling good about BX right now?
    30 Jan 2014, 06:08 PM Reply Like
  • DAG Investments
    , contributor
    Comments (4132) | Send Message
     
    I know you weren't asking me, but yes, I'm feeling good about BX going forward ... the only problem all along was going public a year before the worst financial crisis since the great depression ... shame on them for not having predicted what no one else did or could have? Personally, I think not. By the way, that's from someone who has bought two financials stocks in the past thirty years ... BX was just too good to pass up.
    30 Jan 2014, 06:25 PM Reply Like
  • ilovefastgraphs
    , contributor
    Comments (135) | Send Message
     
    Yep, I bought some BX during the dip at $30. It was a screaming buy then (down by almost 10%), but I didn't have the guts to buy more. Sighzz
    1 Feb 2014, 07:28 AM Reply Like
  • DAG Investments
    , contributor
    Comments (4132) | Send Message
     
    Agree ... even though I think BX goes a good bit higher (over time), chasing is rarely a good idea.
    1 Feb 2014, 12:30 PM Reply Like
  • ilovefastgraphs
    , contributor
    Comments (135) | Send Message
     
    Hi DAG1996, should we buy more BX at this time or wait for a slight pullback?

     

    Morningstar has a fair valuation of $33, which is very close to the current stock price.
    2 Feb 2014, 12:07 AM Reply Like
  • DAG Investments
    , contributor
    Comments (4132) | Send Message
     
    @ilovefastgraphs, There are too many factors that should go into each buy decision for anyone to answer that question for anyone else, but with that said, my opinions on BX are in my comments above and in my article linked above. Chasing a rallying stock rarely works out well so I would usually at least wait for a dip, especially now that volatility has returned to the market (which is not a bad thing).

     

    At the same time, I disagree with Morningstar. I think fair value of BX is well above $33. In October, my fair value call for BX was $34. However, at the start of the new calendar year, I raised my price target to $37 with a 9-12 month timeline. In fact, when I'm able to update my evaluations to write a new article, I'll probably raise my target price again.

     

    So, whether to buy here depends partially one whether one would be satisfied with at least ~$37 within probably much less than the 8 months I originally thought it would take to get to that level. I hope that helps.
    2 Feb 2014, 12:37 AM Reply Like
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