Blackstone still sharply undervauled

"The entire [private equity] group trades at an enormous discount to the traditional asset managers, says Brandywine analyst Charlie DyReyes, sounding like he listened in on Blackstone's (BX +1%) earnings call late last month. The traditional players are at 15x earnings, while the P-E group - with faster growth potential - trades at 10x.

Blackstone is one of Brandywine's favorite holdings, says DyReyes, and at 15x would be a $45 stock, nearly 50% higher than today's price. Payoff as the firm cashes in on past investments should be one catalyst, and the trend of investors putting more money into alternative asset managers should be another. There's also the payout - if maintained, the stock will yield 7.4% over the coming year.

"I think the Blackstone model is really the model that all of their peers are trying to emulate," says Sandler O'Neill analyst Michael Kim. "With Blackstone you get a yield story, certainly you get a growth story in terms of distributable earnings, and the valuation gap remains. So investors can win any number of ways."

Other P-E sector names: KKR, FIG, APO, OAK, CG.

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Comments (7)
  • mostserene1
    , contributor
    Comments (3709) | Send Message
    Long BX, for dividends and growth.


    I should note that BX is an LP (which I did not realize at the time), so you will receive that special K tax form. Most of the 7% plus yield is taxed as regular income. And the reason some Quote sites show the dividend as 4% and others 7% is that the 4% quotes do not include the capital being returned to the shareholder.


    Growth has plateaued recently, so it is an excellent buying opportunity in my opinion.
    20 Feb 2014, 03:14 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2867) | Send Message
    The div is variable now so websites like Yahoo wont ever have it right. And previously they paid the first 3 quarters as a set rate with a variable 4th q dividend, which was why Yahoo was never right with the yield before.
    20 Feb 2014, 04:43 PM Reply Like
  • Tom_S
    , contributor
    Comments (156) | Send Message
    I like the stock but am a bit concerned about the issue raised here:

    20 Feb 2014, 04:05 PM Reply Like
  • tennis44
    , contributor
    Comments (70) | Send Message
    Bx is in a great position to excel. Buy it now, you will be very happy that you did in 6 months
    20 Feb 2014, 08:40 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (11387) | Send Message
    What makes (BX) a better buy than (FIG)?
    20 Feb 2014, 10:19 PM Reply Like
  • frosty
    , contributor
    Comments (722) | Send Message
    21 Feb 2014, 09:32 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11387) | Send Message
    Schwarzman has expensive tastes which makes me scared he may be a serial overpayer.


    Frankly both companies are gems here.


    Might have to look at both equally.
    22 Feb 2014, 11:23 AM Reply Like
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