Blackrock Inc. (BLK)

Investment management company, absolute leader in ETFs. Money is moving its way toward ETFs. Money has been leaving equities this year, but they are seeing net capital inflows. Their margins are expanding. 17 times earnings.

He likes equity markets and the bull market in the US going forward. Also, likes the secular trend and growth in the use of the ETFs. This one is the undisputed leader. $4.7 trillion in assets. Net inflows regularly. They have had about $100 billion in new assets come in the door in the last couple of months. Margins are growing. If you believe that markets can go higher, that is a growth in fees. If you believe they can grow new assets, that is a growth in fees. If you believe that ETF’s will take market share, that is a growth in fees. Has a 2.5% dividend yield that will grow at 12%-14% a year. Trading at 18X earnings.

A very well-run company. Has a huge ETF business, Best in the world. The right product at the right time. The problem is that it is just asset management and is super cyclical. With the current concerning view of the market, it is a little early to be jumping in. If you have time to sit on this, his view is constructive. Asset management will be cyclical and positively so, especially with their positioning in ETF’s. A solid 3.8% dividend.

Phenomenal company. Huge provider of ETF’s. One of the best asset companies globally. There are pretty negative flows right now. Markets are pretty toppy and have had a great run. It is a challenging space right now and they have had such a good run. Asset managers tend to act as a cyclical versus the markets, and this is not where he would be putting new money.

An excellent company. A huge global company that has really focused on solutions investing, and have verticals virtually for everything. They have the low cost solution, which is the iShares. They have more expensive hedge fund mutual funds. Unfortunately their mutual funds have not performed as well. Generally he is very positive on this company, but prefers Blackstone Group (BX-N).

In the investment industry, there has been a move towards assets going into ETF’s as opposed to mutual fund providers, and this is really one of the biggest ETF providers. The founder is retiring, so there are some management transition risks, but you have to believe it was well planned and the systems are in place for the succession planning. Well positioned to capture investment dollars in that they are not a niche player. Anything you are looking at, whether commodities, the broad market or an option strategy, they will have an ETF for it. In the last year the stock is up over 10%, and it pays a meaningful dividend. He wouldn’t buy just yet because he thinks the easy money has been made in the market.

An asset manager that has iShares. A cheap, efficient and chicken way to get some International, non-North American exposure. There are about 40% Europe, Japan and emerging market. A pretty good growth last quarter. Probably rising dividends over time. Dividend yield of 2.59%. He can see this at $400 a year from now.

We have gone from a watershed shift over the last 3 years and are now in a secular bull market for stocks. This means that for the next 10 years, with interruptions, stocks are probably a much better asset class than fixed income, real estate and commodities. One of the obvious beneficiaries of this are asset managers, companies that get paid a fee to manage money. This company is a leader in that space. Thinks the market is a little concerned in the short run about emerging markets and the strong US$, but thinks it is just a short-term issue.

Dividend seems to be very high. They have benefited immensely from pretty smart investments in real estate. Now they have come up with 2 big energy funds. Because of its historic investments, the dividend quality will now need to be assessed.

The largest global asset manager now. They have iShares, ETF’s, hedge funds, etc. They are moving towards a solution based investment, so if someone comes to them with a bit of money, they are not just offering a one-off, they are trying to put together whole solution packages. Valuation is not exactly cheap, but overall if you want a long term holding, this is not a bad way to play it.

Doesn’t follow this closely, but would be absolutely happy to continue holding if he did own it. He continues to like their iShares ownership franchise. He wouldn’t be afraid to pick it up here and hold for a while.

Money manager, managing $4.6 trillion, $1 million which is in ETF’s. Holds a very enviable position in that fast-growing passive investing space, through the iShares franchise. Also, very strong in the fixed income business, which will attract assets given the aging demographics. 17X forward PE. Long-term growth is probably 10%-12%. Yield of 2.42% with probably a 10% growth rate.

(Top Pick Sep 26/13, Up 23.86%) Very innovative when it comes to ETFs. Doesn’t know if he would be buying it here. What was resistance is becoming support.

The valuation is okay so you won‘t get hurt on it here. They are a very ambitious, focused group. They have outlined opportunities in international markets. It is a well run company. A good core holding. She, however, prefers private equity.

Loves this name. Cost of capital is low and enthusiasm has returned to the market. This is one you could own as a core holding.