Why Blackstone Group LP May Have Further To Fall
Keuka Capital • 74 Comments
Keuka Capital • 74 Comments
Why Owning Blackstone Group LP Is A Risky Proposition
Keuka Capital • 107 Comments
Keuka Capital • 107 Comments
Wed, Feb. 10, 3:15 PM
- These MOUs are paid to take their capital and reap big returns doing deals, not try and support the stock price with share repurchases. “It doesn’t make much sense, obviously,” says UMass economics professor William Lazonick.
- Yet The Carlyle Group (CG +3.3%) today joined Apollo Global (APO -0.9%), KKR (KKR -5.2%), and Fortress Investment (FIG -1.7%) in launching sizable share repurchase programs, with Carlyle CEO David Rubenstein saying (earnings call transcript) none of his company's owners finds the current stock price "satisfactory or acceptable."
- Don't look for Blackstone (BX +1.9%) to join the crowd. “Limited partners believe that if you don’t invest in your own funds, you don’t show confidence or alignment,” said Stephen Schwarzman on his recent earnings call (transcript). "We always want to have a lot of money around." Just to be clear, Schwarzman has also been very vocal about how cheap he believes Blackstone shares are.
- The last word goes to Lazonick: “At least they’re not buying high, but that’s not relevant ... They should be trying to figure out how to invest better.”
- ETFs: PSP, PEX
Thu, Jan. 28, 8:26 AM
Thu, Jan. 28, 7:46 AM
- Q4 economic net income of $435.7M or $0.37 per share down 70% from a year ago. Distributable earnings of $878M down 23%; per share of $0.72 down 22%.
- Fee revenues of $659.9M down 4% Y/Y. Performance fees of $194M down 85%.
- Fee earning AUM of $246.1B up 14% Y/Y. Dry powder of $80B.
- Private-equity saw a 9.5% increase in fund carrying value for the year; real estate a 9.7% increase; hedge funds a 2.9% increase.
- Credit is a different story with all strategies lower for the quarter. The company did put a record $2.6B to work during the quarter - mostly in energy and European direct lending.
- Conference call at 11 ET
- Previously: Blackstone misses by $0.09, misses on revenue (Jan. 28)
- BX flat premarket
Thu, Jan. 28, 7:13 AM
- Blackstone (NYSE:BX): Q4 EPS of $0.37 misses by $0.09.
- Revenue of $877.18M (-59.0% Y/Y) misses by $312.82M.
Wed, Jan. 27, 9:46 PM
- Last month, Carlyle Group (NASDAQ:CG) co-founder David Rubenstein was licking his chops over "maybe the greatest energy investing opportunities we've ever seen," and Avenue Capital's Marc Lasry called the energy bust a "once-in-a-lifetime opportunity."
- Source: WSJ
- Oil, however, has continued to plunge, and along with it the finances of already-struggling oil-and-gas companies. Avenue has been burned. It quickly put to work $600M from $1.3B raised about ten months ago, and has lost about $200M. Blackstone's (NYSE:BX) GSO Capital, on the other hand, is treading carefully, having only invested about $100M of $3.5B raised for an energy fund last year.
- "The only way we get hurt is if oil goes to $20 a barrel and stays there for a year or two,” says Lasry. "I'll make that bet, because if oil goes to $20 and stays there, that means the whole industry is in bankruptcy.” His fund is buying up debt of industry players yielding more than 10%. If the companies survive, it pockets those yields, and if not, Avenue's debt holdings will be turned into equity and there's a chance to profit that way.
Wed, Jan. 27, 5:30 PM
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Thu, Jan. 21, 10:28 AM
- Fans of P-E and contrarian headline indicators may be sniffing a bottom for the sector as Bloomberg pronounces Henry Kravis' (KKR +3.5%) golden age for private equity claim a bust.
- Kravis was referring to the years prior to the financial crisis, but a check of the scoreboard finds those mega-deals have mostly produced mediocre results. The endowments and pension plans which invested in those most of those deals would have done better calling up Vanguard.
- “The big deals were done more out of ego than economic sense," says an advisor to pension plans. "People paid steep prices and put on too much debt.”
- The question going forward is if the P-E giants have learned their lesson. According to Bloomberg's sources, TPG Capital has sworn off the huge deals, and other players have vowed to focus on price, not size.
- Interested parties: Blackstone (BX +3.5%), Apollo Global (APO +2.8%), Carlyle Group (CG +4.2%)
Mon, Jan. 11, 4:12 PM
- Blackstone (NYSE:BX) could have interest in entering the nontraded REIT business, says FBR's Daniel Altscher, and buying NorthStar Asset Management (NYSE:NSAM) could be a way in.
- As for Apollo Global (NYSE:APO), Altscher reminds it tried, but failed to buy AR Capital last year.
- Other possible suitors include traditional asset managers, brokers, sovereign wealth funds, PE funds, and insurance companies.
- NorthStar's "stable income stream" could be used to support a far higher debt level, says Altscher, and the sale price could end up being at a meaningful premium to the current level. The stock gained 11% today, but is off more than 40% Y/Y.
- As for NorthStar Realty Finance (NYSE:NRF) and NorthStar Realty Europe (NYSE:NRE), a sale of either is unlikely, says Altscher.
- Previously: Strategic alternatives at NorthStar Asset Management; stock up 3.3% (Jan. 11)
Thu, Jan. 7, 8:13 AM
- Blackstone (NYSE:BX) is among those weighing a bid for Ascendas Hospitality Trust, reports Bloomberg.
- The Singapore-based hotel owned has a market value of nearly $600M, and said last month it was reviewing strategic options after receiving unsolicited interest.
- Ascendas owns 11 hotels with 4.1K rooms in Australia, China, Japan, and Singapore.
Tue, Jan. 5, 11:48 AM
- Blackstone's (NYSE:BX) GSO Capital Partners has partnered with Houston's Rivington Securities to help identify and structure deals in the roughed-up middle market upstream energy sector.
- "The regulatory environment has made it more difficult for many traditional capital groups to deliver creative, more flexible products," says Rivington founder and principal member Christopher Wagner. "We believe the opportunity set could be $1 billion of new investments within the first few years," says Rivington's Rick Makin.
Dec. 18, 2015, 8:21 AM
- After completing a strategic review of its U.S. operations, RioCan (OTCPK:RIOCF) agrees to sell its U.S. portfolio of 49 retail properties in the Northeast and Texas for $1.9B to Blackstone (NYSE:BX) Real Estate Partners VIII.
- The sale will ensure ample funds with which to make its just-announced purchase from Kimco and to significantly deleverage the company balance sheet.
- The sale price represents an increase in value of about C$930M over the cost of the properties (which were acquired between 2009 and 2015), or an estimated IRR of roughly 16%.
Dec. 11, 2015, 8:01 AM
- Blackstone (NYSE:BX) Real Estate Debt Strategies III LP will originate and structure mezzanine debt linked to institutional-grade real estate in North America and Europe, according to documents Bloomberg has seen.
- Thanks to the low rate environment, the P-E firm has lowered the performance hurdle on the new fund to just 6%.
- Blackstone currently has about $10B on its real estate platform which has made a 12% net return since it began investing in 2008.
Dec. 8, 2015, 7:03 PM
- Blackstone (NYSE:BX) is buying 32 multi-family properties from Greystar Real Estate Partners for $2B. The buildings contain 10,399 units, and are in California, Florida, New York, Washington, and other states. Greystar will continue overseeing the properties.
- Following the deal, Blackstone will own 57K apartment units altogether. The P-E firm has been on an apartment-buying spree, as it looks to profit from growing rents amid declining homeownership rates. In October, Blackstone inked a $5.3B deal to buy Manhattan's 11.2K-unit Stuyvesant Town-Peter Cooper Village complex.
Dec. 8, 2015, 9:52 AM
- With the stock price charts of all three moving sharply down and to the right for several months, Bank of America pulls Buy ratings on Apollo Global (APO -3%), Blackstone (BX -2.6%), and Carlyle Group (CG -1.5%). All are downgraded to Neutral.
- Not completely giving up on the sector, BofA upgrades the equally beaten-down Ares Management to a Buy.
Dec. 4, 2015, 7:18 AM
- General Electric (NYSE:GE) has completed the sale of a mortgage loan portfolio from its U.K. Home lending business to a consortium of Blackstone (NYSE:BX), TPG Special Situations Partners and CarVal Investors.
- "With today’s closing, we have nearly reached our target goal of reducing GE Capital ending net investment by $100B this year," said Keith Sherin, GE Capital chairman and CEO.
- The portfolio represents aggregate ending net investment $5.8B and has a face value $5.9B.
Nov. 30, 2015, 6:12 PM
- Mexico's state-owned oil company Pemex says it will partner with Blackstone's (NYSE:BX) Global Water Development Partners to invest $800M in water treatment infrastructure projects.
- The partnership will focus on storage and residual water treatment projects at Pemex oil production areas both onshore and offshore as well as at refineries and petrochemical plants.
- It is not clear how much funding each entity will contribute or which specific projects will be launched first.
Blackstone Group LP is a global alternative asset manager. Its alternative asset management businesses include the management of corporate private equity funds, real estate funds, funds of hedge funds, credit-oriented funds, collateralized loan obligation vehicles and separately managed... More
Industry: Asset Management
Country: United States