Gavin GrahamBlackstone Group LPBXDON'T BUYSep 16, 2014

He owns other alternative asset managers, which have sold off from negative headlines. This sector will underperform going forward, but the stocks are cheap. There's lot of insider buying at BX, which is the best of the lot.

(Note the short timeframe.)  Down, but great long-term stock. Dropped on turmoil in private credit. Big names like this are still raising a lot of $$. There will be some issues from credit, but not the apocalyptic view that some have. A juggernaut.

Has owned this a long time. Pays a 4.5% dividend. Can be volatile, but is a long-term hold. Is a stable business. 

Loves the company, but not the valuation. There was this rah-rah enthusiasm for private equity companies as though they'd found a miracle cure for their businesses. Lots of competition in private equity and private credit, so potentially few deals to be had and for lesser returns. If performance starts to wane, fees may be in jeopardy.

You have to think of trends moving forward, especially for financing and underwriting new ideas. Just like the banks, companies like this will be necessary moving forward to provide all the financing to fulfill the trends. 

Trump's announcement yesterday that he didn't want large institutions owning individual homes hit names like this one. Long term, makes a lot of sense. But it's really been sideways to negative over the past year. 200-day MA has floated downward a bit. Higher beta.

He prefers some of the more traditional financial names such as Citi, WFC, MS, or GS.

The entire space is down ~20% over the past year, very good buying opportunities. A host of private equity, real estate, private credit. Great management team. A little under half its asset are perpetual capital (doesn't have to be paid back right away). Price of debt is coming down in the US.

Raised about $200B in last 12 months. Lots of dry powder of about $200B, which they can apply to different deals. In this marketplace, as some companies crater in price, private equity is coming in and buying fairly cheaply. Sees price around $200 in next 2-3 years. Dividend is chunky, as its businesses are variable. Yield is 3.77%.

#1 company in this space. Surprising, then, how inconsistent the results are. Could be just the nature of the business. Too volatile for him, but makes a lot of sense in an investor portfolio to give exposure to private equity and alternatives. Don't make it 1 of 10 core stocks; fully supports it as a piece of a larger portfolio. It's a hold.

We think it may still have room. Much will depend on interest rates but they do appear to be set to head lower. Deal activity has increased after a 'tariff pause' in April and May. Consensus still calls for very good earnings growth over the next two years. 
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Chart had well over a year of going nowhere, and then broke out without retracing and went to the moon. Now it's pulling down. The next thing you'll look for is where could it land, and the chart shows that that's where it is right now -- old resistance becomes new support. His book Sideways explains why.

Chart's bouncing off that support, which is very positive. He'd be legging in. If it breaks below ~$130 or so, that's bad news. For now, it's above that, so put a leg in. Your stop loss is the old resistance level, the place to sell.

Under pressure along with all the rest in private equity. Trouble finding liquidity for a lot of their deals. With rising rates, power is now in the hands of the lender, but private equity firms are huge borrowers. Stay away.

It reports Thursday. They have a giant data centre business within their company. Blackstone will tell us otherwise, that the data centre them is not over. It could help the semis stocks.

Allocations to alternative assets will only increase; they've increased 12.5x over the last 10 years (vs. 4x for regular assets), from $25 trillion today to $65 trillion by 2032. They invest big capital in areas like infrastructure and private credit. Not cheap, but worth it.

He's invested heavily in private equity, and those businesses have grown ~15% a year, which is reflected in the stocks. No reason for this to slow down, long runway. Pick your poison, buy one or all of BN, APO, KKR, or BX. Next 5 years should be a minimum of a double.

Has recovered well in recent years, but it's private equity, which is opaque--what do they own?