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Results meet our expectations and maintaining our $21 target price

|Includes: The Blackstone Group L.P. (BX)

 We believe cash earnings for BX should continue to increase, and point to the growth in realized revenue in the private equity segment as one of the most important data points from today’s earnings release.

Based on our projections, we expect the recent growth in realized revenue in the private equity segment to continue for the rest of this year.

We also expect a rebound in incentive fees in BX’s other business units. Realized carried interest in the hedge fund segment was below our expectations based on quarterly appreciation of 2%, below the growth in the S&P 500 in the quarter.

We continue to project BX starts earning management fees on a new $10 billion real estate fund in 2012 and raises $3B in hedge funds and credit funds for the rest of 2011 and 2012.

We have increased our 2012 free cash flow per share estimates slightly based on fee-earning AUM this quarter. We increased our 2012 free cash flow per share estimate increased to $1.57 from $1.55. Please contact research@diligencefirst.com for a copy of our financial projections.

We were a buyer of BX shares yesterday when the stock opened at $18.20 and maintain our target price of $21 based on a 7.4% free cash flow yield on our 2012 free cash flow per share projection of $1.57. We believe the current stock valuation continues to underestimate the sustainability and future growth of BX’s free cash flow.