Joshua Varghese Blackstone Group LP BX-N TOP PICK Oct 08, 2024

Excellent management team very strong at capital allocation. Focus on real estate created difficulties during higher interest rates. As rates stabilize, business will perform well. Will continue to own shares. 

Private equity is interesting here. They raised $59 billion in equity in Q4 and hold $200 billion in free cash flow to deploy. He just bought it. 

Holds shares in income growth fund. Private equity business located in the USA. Has been liquidating unprofitable business positions. Expecting better performance of share price going forward. Difficult to value company on a NAV basis, but is a quality company. 

It has value and the CEO is great, including a great data centre. However, private equity is in a rocky moment now.

He bought more. It's lagged its peers and they slightly missed EPS, but they started this year with $200 billion cash and have invested $50 billion mostly infrastructure and private credit. He thinks net realization rates will increase going into 2025.

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

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.

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.

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.