Blackstone Group LP (BX)

There are 4 or 5 key themes that have legs in front of it over the next number of years. The most important one, beyond tech and industrials, is probably financials. Within financials, you have insurance, banks, regional banks and asset managers and capital market companies. If you believe we are in a long-term bull market for stocks, you want to own asset managers. It is an area that has growth and has not been highly priced. Prefers Blackrock (BLK-N) over this, and an active manager over a passive manager.

They are launching infrastructure and real estate funds. They have done a great job of gathering assets. They have also had the ability of disposing of assets they bought previously through IPOs. They are able to pay out a lot of their cash as a high level of distribution. (Analysts’ target: $38.00).

This is a private equity firm, one of the biggest in the world. They’ve just did a deal for an infrastructure fund for Saudi Arabia. Trading at about 10X on earnings. They are good asset accumulators. Dividend yield of 7.2%. (Analysts’ price target is $36.)

He is constructive on financials. There is a little bit more risk on this one because of their private equity holdings, their hedge fund holdings, etc. It is not as transparent or leveraged to the basic US consumer the way other financials are, but distributions are quite strong. That murkiness is reflected in the valuation. If you are constructive on the markets and like high dividend payouts, this could be a good holding for you.

A very attractive name, and still feels confident that it will do well. It has a very high yield. He doesn’t see why it shouldn’t do well in the future, being a good segment of the market, if capital markets remain strong, which he feels they will.

Within the financial sector, asset management is a sector that he really likes. Once you are managing the assets, you get recurring revenue for a long period of time. This company has about 25% of the money they manage in the hedge funds, with the balance largely been in private equity and alternative assets. A great business. This is something you can own.

He is looking at this. People are looking for some kind of alternative investments, and this is the biggest private equity firm out there. The dividend yield is upwards of 8% right now, and that is just because you get that lumpiness of deals being bought and sold. If you look at their stock price long-term growth, it has risen about 30% a year on average for about the last 10-20 years. He is quite interested in this.

This is classified as a financial type of company, and financials in the US have very distinct seasonality. Historically this sector is currently reaching the end of its seasonal strength, which is normally from around the middle of October, right through until around the end of April. It has been slightly underperforming the market lately, which is not a good sign. If you own, put in your Stops very closely at around current levels, in order to protect yourself against the possibility of a correction coming in the summer.

An investor is not going to be able to get the level of diversification that they need. Also, most people don’t understand what is in these animals. If you want to invest in private equity, the time to do it is at the bottom of a cycle. He would pass.

The high dividend gives you a unique tax situation. He would rather hold it in a fund so that the fund takes care of it for you. He really likes the company. The yield is slightly over 11%.

(A top pick April 3/17. Up 7%.) He recently sold this. A limited partnership and has tax implications for non-registered accounts. He didn’t want to deal with the US tax implications. Still likes the stock and the company, and it is quite good for a registered account.

A private equity company. In the bad times, they were able to buy a lot of assets, which they have either sold right now or will continue to sell. Recently bought about $100 billion in cash, which is sitting on their balance sheet, which they can use to buy other things. Thinks it is worth somewhere in the $50-$60 range. Pays a very strong dividend of 7.8%. (Analysts’ price target is $35.)

Trading at 10X earnings and has a very good dividend yield of 5.2%. 2 things happened with this company. They were very smart at buying a lot of assets in the downturn in the equity market, and if it continues like this, it will give them the opportunity to harvest gains from that. The other thing was that they raised about $100 billion. They have a lot of firepower if something happens to the stock market. Feels the company is worth somewhere between $55 and $60 if things work out. (Analysts’ price target is $34.75.)

They hold investment vehicles. It is starting to uptrend. It is good for at least the next few months. (Analysts’ target: $35.50).

This is a US limited partnership, and you want to make sure you don’t run into a tax filing problem. He would suggest you get some tax advice from a professional. This company is basically a private equity firm with about $300 billion in assets. About a 3^rd of it right now is in cash, waiting for opportunities. They’ve had good payouts, but the payouts are lumpy, as it depends on when they monetize different projects. They’ve been pretty good at what they’ve done, but they really haven’t been rewarded.