Blackstone Group (BX) constitutes the world’s largest private equity firm, but it’s really a lot more. Indeed, private equity isn’t always the biggest business for Blackstone in terms of revenue and assets under management. The firm, founded by Wall Street legends Peter Peterson and Stephen Schwarzman, has plenty of other investment areas, including real estate, hedge funds, and closed-end mutual funds.
It may be more accurate to call Blackstone the world’s biggest independent alternative asset manager. The firm also has a thriving financial advisory business, assisting clients in areas such as mergers and acquisitions.
Blackstone has performed admirably in all different kinds of economic environments, picking up assets on the cheap after they plunged during the Great Recession and then reaping the rewards as these assets have appreciated during the recent recovery of the economy and financial system.
That recovery also boosts opportunities for Blackstone’s financial advisory business. In addition, the firm is expanding quickly in emerging markets such as China and Brazil.
Blackstone’s businesses obviously have more volatility than those in other sectors. This isn’t a utility. But it’s an extremely successful and stable company. So it’s worth considering as an investment.
Jumping profits, dry powder
Blackstone’s profit soared 58 percent in the first quarter, to $568 million from $360 million a year earlier, exceeding expectations. Revenue surged 64 percent to $1.15 billion.
Blackstone executed one of the biggest real estate deals since the financial crisis during the first quarter, agreeing to buy almost 600 U.S. shopping malls from Australia’s Centro Properties for $9.4 billion. That still left the firm with $25.8 billion in capital on hand to invest in private equity and real estate.
After the earnings report, Jefferies & Co. analysts lifted their target price for Blackstone’s shares to $22, compared to its recent level of $16.90.
“Fundamentals across the company's core businesses continue to improve, which in turn should drive an acceleration to earnings throughout 2011 and beyond," the analysts wrote.
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