Nasdaq Ends Lower as Investors Sell Big Tech

Amazon, Apple Tesla and Facebook all fell. Nvidia tumbled around 4%.

The S&P 500 technology sector index ended a four-day winning streak. Earlier this week, investors’ favor for heavyweight growth stocks pushed the S&P 500 and the Nasdaq to record highs.

The S&P 500 energy sector index fell more than 1% and tracked a drop in crude prices on expectations of more supply after a compromise agreement between leading OPEC producers.

Fresh data showed the number of Americans filing new claims for unemployment benefits fell last week to a 16-month low, while worker shortages and bottlenecks in the supply chain have frustrated efforts by businesses to ramp up production to meet strong demand for goods and services.

Federal Reserve Chair Jerome Powell told lawmakers he anticipated the shortages and high inflation would abate. Yet many investors still worry that more sustained inflation could lead to a sooner-than-expected tightening of monetary policy.

“People are very nervous and concerned about inflation, tax rates and the (2022 midterm) election. Those three things are very much on people’s minds,” said 6 Meridian Chief Investment Officer Andrew Mies, describing recent phone calls with his firm’s clients.

Unofficially, the Dow Jones Industrial Average rose 54.52 points, or 0.16%, to 34,987.75, the S&P 500 lost 14.29 points, or 0.33%, to 4,360.01 and the Nasdaq Composite dropped 101.82 points, or 0.7%, to 14,543.13.

Morgan Stanley dipped as much as 1.2% after it beat expectations for quarterly profit, getting a boost from record investment banking activity even as the trading bonanza that supported results in recent quarters slowed down.

Second-quarter reporting season kicked off this week, with the four largest U.S. lenders – Wells Fargo & Co, Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co – posting a combined $33 billion in profits, but also highlighting the industry’s sensitivity to low interest rates.

Blackstone said late on Wednesday it would pay $2.2 billion for 9.9% stake in American International Group’s life and retirement business. AIG and Blackstone both rallied.

Johnson & Johnson dipped after it voluntarily recalled five aerosol sunscreen products in the United States after detecting a cancer-causing chemical in some samples.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Noel Randewich; Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel)

 

Blackstone to Buy Home Partners of America in $6 Billion Deal

The U.S. housing sector has become red hot, boosted by a strong economic recovery, ultra-low interest rates and continued demand for bigger homes from people working remotely due to the pandemic.

Home Partners owns more than 17,000 houses in the United States that it rents out to tenants who are given an option to buy them eventually.

“The fundamental premise of the Home Partners platform is to provide residents with the opportunity to live in their chosen home with the option to purchase it,” Jacob Werner, Blackstone real estate senior managing director, said in a statement.

The deal is expected to close in the third quarter, the companies said.

Goldman Sachs and Co LLC was financial adviser to Home Partners, while Sidley Austin LLP and Fried, Frank, Harris, Shriver & Jacobson LLP acted as its legal counsel.

BofA Securities and Wells Fargo Securities were financial advisers to Blackstone, while Simpson Thatcher and Bartlett LLP was its legal counsel.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva and Rashmi Aich)

Blackstone Hires Former Goldman Partner for Its Hedge Fund Unit

By Svea Herbst-Bayliss

Paget MacColl will join as Global Head of Blackstone Alternative Asset Management’s (BAAM) Institutional Client Solutions. Blackstone’s hedge fund unit invests $82 billion for pension funds and other institutional investors by buying stakes in investment firms, seeding new managers, and offering access to managers. It is the world’s biggest hedge fund investor.

MacColl takes over the position from Olivier Meyohas who is moving into a broader business development role at Blackstone.

In her new role, MacColl will be introducing clients to products like the new Blackstone Horizon platform which will aim to deliver big returns by investing with fund managers targeting fast-growing public and private companies.

“Paget is a talented executive with experience marketing the investment solutions that BAAM has to offer to investors around the world. She brings a diverse range of skills, relationships and experiences and will be a critical leader within BAAM,” John McCormick, Global Co-Head of BAAM, said in a statement.

MacColl joined Goldman after graduating from Princeton University and has worked there for nearly 22 years. Most recently she was co-head of the Americas Institutional Client Business within Goldman’s Asset Management unit.

MacColl is the latest in a string of Goldman partners to leave the investment bank as others have departed for a family investment office, hedge fund, and private equity firm over the last months.

(Reporting by Svea Herbst-Bayliss in Boston; Editing by Matthew Lewis)

Blackstone’s First-Quarter Earnings Surge as It Cashes Out on Assets

By Chibuike Oguh

Dealmaking activity surged in the quarter as a booming stock market and low borrowing costs emboldened private equity firms to sell some of their assets for top dollar. [L8N2LR63L]

Blackstone reported distributable earnings per share of $96, surpassing the average Wall Street analyst estimate of 76 cents, according to financial data provider Refinitiv.

In its push to cash out on assets in the quarter, Blackstone floated app Bumble Inc in the stock market in a $2.2 billion initial public offering. Blackstone had paid $3 billion for a majority stake in Bumble in 2019. [L4N2KH2L]

Blackstone said its private equity portfolio appreciated 15.3% in the quarter, compared with an 5.8% rise in the benchmark S&P 500 stock index over the same period. Opportunistic and core real estate funds rose 5.3% and 3.2%, respectively.

Total assets under management rose to $648.8 billion, from $618.6 billion in the previous quarter, driven by strong fundraising. It ended the quarter with $148.2 billion of unspent capital.

Blackstone said it would pay a quarterly dividend of 82 cents per share.

(Reporting by Chibuike Oguh in New York)

Exclusive: Blackstone Seeks $4 Billion for Tactical Opportunities Fund

By Chibuike Oguh

It is the fourth such fund to be raised by the New York-based firm. Dubbed Blackstone Tactical Opportunities Fund IV, it will have a mandate to invest in assets that typically fall outside the scope of Blackstone’s other funds, from timber and mines to oil tankers and satellites. It can also invest in companies, either through their equity or their debt.

Blackstone has marketed its predecessor funds in this category as offering “well-protected downside and low correlation to public markets”.

The fund could finalize its first commitments from investors by June, the sources said, requesting anonymity because the matter is confidential.

A Blackstone spokesman declined to comment.

Blackstone’s previous Tactical Opportunities investments include dating app Bumble Inc, cybersecurity firm FireEye Inc, life sciences firm Cryoport Inc, and telecoms infrastructure company Phoenix Tower International.

Blackstone raised $4.09 billion for Tactical Opportunities Fund III in 2019. Its Tactical Opportunities Fund II and inaugural Tactical Opportunities Fund, which raised $6.7 billion and $5.6 billion respectively, had both returned 1.3 times of its investors’ money as of June 2020, according to the California Public Employees’ Retirement System.

Blackstone’s Tactical Opportunities funds have $30 billion in assets under management across 142 investments, according to its website. The unit is run by David Blitzer, a Blackstone senior managing director and an investor in sports teams such as New Jersey Devils of the U.S. hockey league, the National Basketball Association’s Philadelphia 76ers, and English soccer club Crystal Palace.

(Reporting by Chibuike Oguh in New York; Editing by Chizu Nomiyama)

Blackstone’s Profit Surges About 60% in Q4; Target Price $78 in Best Case

The world’s leading investment firm Blackstone Group reported better-than-expected earnings in the fourth quarter of 2020, largely driven by a surge in sales across most of its asset class.

The New York-based manager of alternative assets reported its distributable earnings of $1.5 billion or $1.13 per share in the quarter, which represents year-over-year growth of about 60% from the same quarter last year when the company reported $0.72 per share. That was also higher than the Wall Street consensus estimate of $0.90 per share.

Blackstone reported GAAP net income attributable of $749 million, up more than 50% from the same period a year earlier, for the quarter and $1.0 billion for the year.

The investment firm has also declared a quarterly dividend of $0.96 per share to record holders of Class A common stock at the close of business on February 8, 2021. This dividend will be paid on February 16, 2021.

Despite this, Blackstone shares traded nearly flat at $64.90 in pre-market trading on Wednesday. However, the stock surged about 15% in 2020.

Blackstone Stock Price Forecast

Twelve analysts who offered stock ratings for Blackstone in the last three months forecast the average price in 12 months at $66.13 with a high forecast of $78.00 and a low forecast of $51.00.

The average price target represents a 1.90% increase from the last price of $64.90. From those 12 analysts, eight rated “Buy”, four rated “Hold”, and none rate “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $78 with a high of $126 under a bull scenario and $30 under the worst-case scenario. The firm currently has an “Overweight” rating on the investment firm’s stock.

Several other analysts have also recently commented on the stock. Zacks Investment Research raised from a “hold” rating to a “buy” rating and set a $66.00 price target. BMO Capital Markets lifted their price target to $51 from $50 and gave the stock a “market perform” rating.

In addition, Oppenheimer raised shares from a “market perform” rating to an “outperform” rating and set a $58 price target. Piper Sandler issued an “overweight” rating and a $71 price target on the stock.

Analyst Comments

“Best-in-class private markets franchise with significant brand power, $152b of dry powder and strong mgmt company balance sheet uniquely position Blackstone (BX) to capitalize on a challenging recession backdrop and drive above peer growth. Fundraising machine that could raise nearly $230 billion in 2021-22, supported by newer initiatives (i.e., Growth Equity, Life Sciences, Core+ RE, Tac Opps, Secondaries, Asian PE etc.) and existing strategies,” said Michael Cyprys, equity analyst at Morgan Stanley.

“We view BX as best positioned for the secular growth story in alternatives given their leading businesses in every major category that should command a premium multiple.”

Check out FX Empire’s earnings calendar

Blackstone to Acquire Simply Self Storage for $1.2 Billion; Target Price $60

The world’s leading investment firm Blackstone Group said it will acquire Simply Self Storage from Brookfield Asset Management for nearly $1.2 billion, the Wall Street Journal reported.

The nontraded real-estate investment trust, known as BREIT, will buy eight million-square-foot portfolio of self-storage facilities. The deal is expected to be announced Monday.

BREIT plans to continue to acquire smaller assets in the fragmented industry and run them under the Simply brand, Tyler Henritze, head of acquisitions in the Americas for Blackstone’s real-estate group told the WSJ.

Blackstone shares closed 0.23% lower at $54.64 on Friday; the stock is down nearly 2% so far this year.

Blackstone Stock Price Forecast

Five equity analysts forecast the average price in 12 months at $63.90 with a high forecast of $69.00 and a low forecast of $58.50. The average price target represents a 16.95% increase from the last price of $54.64. From those five analysts, four rated “Buy”, one rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $69 with a high of $113 under a bull-case scenario and $30 under the worst-case scenario. The firm currently has an “overweight” rating on the asset manager’s stock. TheStreet raised Blackstone Group from a “c” rating to a “b” rating in July.

Several other analysts have also recently commented on the stock. In July, William Blair reaffirmed an “outperform” rating on shares of Blackstone Group. Bank of America decreased their target price to $58 from $62 and set a “neutral” rating for the company. Credit Suisse Group raised their target price to $65 from $64 and gave the company an “outperform” rating. At last, Barclays raised their target price to $64 from $58 and gave the company an “overweight” rating.

Analyst Comments

“Best-in-class private markets franchise with significant brand power, $156b of dry powder and strong mgmt company balance sheet uniquely position Blackstone (BX) to capitalize on a challenging recession backdrop and drive above peer growth. Fundraising machine that should raise over $211b in 2020-21, supported by newer initiatives (i.e., Infrastructure, Core+ RE, Tac Opps, Secondaries, longer-dated PE, Asian PE etc.) and existing strategies,” said Michael Cyprys, equity analysts at Morgan Stanley.

“We view BX as best positioned for the secular growth story in alternatives given their leading businesses in every major category that should command a premium multiple.”

Upside and Downside Risks

Upside: 1) Ramping cash performance fees in newer funds/strategies incl: BCP VI, VII, Tac-Opps, BREP VIII. 2) Growth in Fee-Related Earnings from fee activation of newly raised funds. 3) Faster penetration of retail channel – highlighted by Morgan Stanley.

Downside: 1) Deeper recession that delays harvesting of investments and dampens returns which lower cash earnings. 2) Regulatory risk: Increased political and regulatory scrutiny of the private equity business model.

Check out FX Empire’s earnings calendar