The Blackstone Group L.P. (BX)

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All Comments on BX

  • commenter
    mythoughts
    Jul 05 03:45 PM
    My Website
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    To "the only answer". I love it. Reply
  • commenter
    Information
    Arbitrage
    Jul 03 10:29 PM
    My Website
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    mgv11 - quite true. there are no easy answers in accounting. the best you can do is to emphasize transparency and market-based measures, apply the rules consistently and let managers design their capital structures accordingly.

    left coast rick - i wrote my post the way i did for a reason. if you didn't like it, ok. i think the fas 157 rules are pretty clear and your framing of the interpretation issue makes you sound like steve schwartzman. i don't agree.

    goodbadandugly - if the income producing properties are so attractive, then fund them so you can hold them. if you can't, you are stupid and deserve to incur whatever wrath the market wishes to bring upon you.

    user 219640 - all i read is how it difficult it is to specifically identify mortgages wtihin these securitized portfolios. while theoretically you may be right, the issue still remains that you should be prepared to fund the mortgages if they can't be moved. otherwise, you are subject to the short-term funding whims of the market, which are clearly pretty ugly at present. the liquidity issue is separate and apart from valuation. if you can hold something valued at zero until it becomes non-zero, then you have addressed the most pressing part of the problem.

    roger     Reply
  • commenter
    The Only
    Answer
    Jul 03 04:43 PM
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    First shoot all the lawyers, second shoot all the bankers. Reply
  • commenter
    User 219640
    Jul 03 03:39 PM
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    Not all valuable financial assets are liquid. Many are expected to be held to maturity. Think of CD's, worth much less if cashed in early.

    I believe that banks should be allowed to account for CDO's by treating them as portfolios of individual mortgages. Mortgages are valued as discounted cash flows, less reserves for expected losses.

    If a portfolio is expected to foreclose half the mortgages (a high number even in Vegas), and the forclosure will return half the principal plus accrued interest of the loans (a number widely accepted), then the CDO is worth 75% of face value. Since a super senior tranche gets the first 85% of recoveries, that means the bank's piece is worth 88% of face value.

    FAS 157 was created in response to a problem where Japanese banks were refusing to recognize losses on commercial real estate in the 1990's, leaving little lending power and stagnating their economy. US banks must reserve for expected losses, so there is no point in not foreclosing when a loan stops performing.

    With CDO's characterized as "toxic", the market is not objective but emotional. Pricing CDO's based on a few bottom-fishing transactions simply drains reserves and requires equity dilution.

    The rules for accounting for direct loans are well understood by everyone. They should be applied to the mortgages underlying CDO's.

    BTW, leverage does not apply to super senior tranches. They were constructed and retained by the banks, not purchased on margin. If they were, the margin would have been called a year ago.     Reply
  • commenter
    goodbadandug
    ly
    Jul 03 11:52 AM
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    Same thing different crisis. IN the late 80's crisis you had attractice income-producing properties being marked-to-market. Sure, maybe no one wanted to buy them, but they still had excellent cash flow. Same today; you have MBS/CMBS portfolios with no market, but what about the 90% performing loans and 7%-10% yields. Is there no value in that??? Nonesense Reply
  • commenter
    Left Coast
    Rick
    Jul 03 11:10 AM
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    You conclude nothing...it's about management and saavy...wow, big insight...how about analyzing the assertion that FAS 157 is dangerous and defeat it...trouble is the way the regulators and CPA's are interpreting FAS 157 today is over-reactive...btw and it is causing, to a great extent, the absence of liquidity. Reply
  • commenter
    mgv11
    Jul 03 07:36 AM
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    I wonder how much of this FAS 157 valuation issue is being lead by what I can only observe as an overly cautious audit industry since Sarbanes - Oxley. It would appear no matter which way the pendulum swings there seems to be pain somewhere. Reply
  • commenter
    syndicat
    Jul 03 07:03 AM
    FAS 157: Blackstone and Its Banker Buddies Have It Wrong [view article]
    In January 1975 Merrill Lynch started the ML Ready Assets Trust, the first money market fund. That began the systemic change that eventually led to bank deposit rate deregulation.

    Ironically, Merrill Lynch now makes it difficult for investors to access money market funds, preferring that customer balances go into their bank deposit program which pays much less.

    The current rates on the Ready Assets Trust is 2.21%, an account
    holder at Merrill with less than $250,000 gets a 0.20% rate in the Bank Deposit Program.     Reply
  • commenter
    Iceberg
    Jun 26 03:00 AM
    My Website
    A Look at Private Equity in Public Hands [view article]
    This is as enlightening, and as short-sighted, as saying that an investment in TROW is just an investment in the management of T. Rowe Price, not in their mutual funds. Yes, your money isn't going to a sexy private equity fund when you buy BX. But BX is a useful proxy: it will tend to do as well as (or as badly as) Blackstone's earnings which are themselves a function of how well Blackstone's black-art investment vehicles do. Reply
  • commenter
    luke
    Jun 11 07:50 PM
    My Website
    Jim Cramer's Mad Money In-Depth, 1/10/08: Bottom's Up [view article]
    When all this volatility in the mortgage business shakes out, I'm willing to bet that those banks that are heavily invested in reverse mortgages (non-FHA, proprietary products) are going to do very well. The default rate is nil and the ROI is very high. Reply
  • commenter
    W David
    Stephenson
    Jun 11 10:38 AM
    My Website
    Clinton and Obama: Hedge Fund Killers [view article]
    Could destroy the entire hedge fund industry? Sign me up, bro... Reply
  • commenter
    Geddy
    Jun 06 03:08 PM
    Wall Street Breakfast: Must-Know News [view article]
    Even China thinks Sprextel sucks! Reply
  • commenter
    Nextel
    Accessories
    Jun 05 08:43 PM
    My Website
    Wall Street Breakfast: Must-Know News [view article]
    China Telecom & Sprint? Reply
  • commenter
    entreq8
    Jun 05 03:42 PM
    A Look at Private Equity in Public Hands [view article]
    And that was insightful? This is common knowledge. There are a couple of listed closed ended fund in the mix by groups such as Brevan Howard, Winton Capital, Marshall Wace, etc that give you exposure to actual alternative strategies, but then you are at the whims of supply and demand from Mr. Market, reflecting in premium/discounts to NAV.
    Yes there are rectifying mechanisms, but they dont always work.     Reply
  • commenter
    RightinSanFr
    ancisco
    Jun 02 11:03 AM
    My Website
    Wall Street Breakfast: Must-Know News [view article]
    If you were to study one industry in business school, it should be the airline industry - many competitors, aggressive consumer marketing, high interest by the financial press, high legacy costs, volatile factors beyond your control, regulation, etc.
    As an investor, I cannot imagine a worse place to go than a major airline. Have been intrigued by the buzz around a start-up once. But never again.     Reply

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