Blackstone Group LP (BX)

Private equity companies are enormously profitable and really cheap because the difficulty is that it is really “deal flow” (?) for them. They cash in on some of their private equities. When you have a strong market like we have had over the last couple of years, you can float stuff off. There have been a raft of IPOs at very good valuations, and the private equity guys have been raking in even more, which is why they are at low valuations. This is probably not the right time to be in any of them.

He would avoid it due to the structure. (See KKR-N today)

(Top Pick Aug 19/13, Up 64.14%) Took profits and then bought back in over the past few weeks. They are harvesting investments of 4-5 years ago and he thinks it goes higher from here. It has a great pipeline that it keep bringing to market. A good solid hold with a good, steady yield.

There is a time to buy private equity firms. It’s when the market is really tough and people are worried about what is in their portfolios. These firms are selling things into the public market as much as they can so it tells you where they think things are going. He likes diversified, banks if you want a financial.

(Market Call Minute.) If you think markets are going higher, these alternative asset managers are the place to be.

Very nice chart. Had a long up swing from mid-2012 and tested several times on the way up. The recent action indicates some uncertainty. Even though it had a fairly significant drop, it is well within the range. He would think it is people that have made quite a bit of money who don’t want to lose their gain and are quick to sell. You want to get out if it drops below $29.

Private equity group firing on all cylinders. Because of the environment we are in they are able to do a lot of good things in all three parts of their business. They are getting their performance bonuses. It is like KKR and she continues to hold that one because of the bigger balance sheet. There is still more room to go in both.

(Market Call Minute.) You want a private equity company to be able to sell into strong markets. Institutions are increasing their allocations to alternative investments and they are getting more money to play with. He would sell if it gets to around $32-$33.

It is cheap and they have 50 billion in real estate assets to IPO in the next 6 months. Catalysts that are identifiable.

This is in the private equity space and she likes this area a lot but has played this through KKR (KKR-N) (?) and Onyx (?). because these 2 companies have most of their own capital in what they are investing in. Likes that alignment of interests. If you have 2 private equity firms, that is really all you need.

Alternative asset management. Private equity, some closed end funds, hedge funds. Trades at 9X earnings versus traditional asset managers at 16X. Over the last 5 years traditional asset managers have been growing their assets by 12% while this one has grown by 202%. Very profitable. Very good retail network. Very compelling valuation. Over 5% dividend yield.

You get the management and bonus fees to the company. When the economy is doing well you get a good spin-off. Stay away from these companies because you don’t know what you are buying.

(Market Call Minute) Thinks it will do really well. You want to be in a name like this.