Opinions
David Burrows
Blackstone Group LP
BX-N
DON'T BUY
Feb 14, 2017
Stock price when the opinion was issued
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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.
(Analysts’ price target is $140.73)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.
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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#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.
KKR & Co (KKR-N) or Blackstone (BX-N)? He prefers an asset manager that is focused on public market equities. Asset classes are always being revalued. At certain times, certain asset classes do better than others. We have just gone through 10 years where regulation, compliance and rules around being a public company went through the roof, and it became very, very expensive. During that time, managing investing in private companies became very attractive, as they didn’t have the same problems. However, many private companies trade at higher valuations than public market companies, and yet public market companies are liquid every day and can be bought or sold. We have entered a period of many years where public market equities and developed markets, are likely to outperform. Asset managers in that area are under-owned and under-loved, and things changing for the better. Multiples are expanding. Prefers Morgan Stanley (MS-N).