What’s ailing Blackstone?
Shares of Blackstone (BX), the king of Wall Street’s kingdom, can now fairly be described as being in free fall. At $26, they are off 16% from their $31 offering price. The stock is down 5% today alone. (The Chinese government is under water too. Ouch.) Why? Let’s just say it’s got nothing to do with Google’s (GOOG) earnings miss. No, Blackstone’s hurting for plenty of other reasons, like ongoing fears about the cycle turning in the private-equity business.
There’s a concrete indicator as well. Last night the chip company Freescale Semiconductor reported a horrendous quarter. Sales were down 14% from the year-earlier quarter, primarily because of weakness at Freescale’s largest customer, Motorola (MOT). Operating earnings are way down.
All of this has to be more than a little distressing to Blackstone, which bought Freescale in December after beating out a group led by KKR in a bidding war. As I’ve written before, it’s a near certainty that Freescale is worth far less today than what Blackstone and its partners paid for it eight months ago. Motorola’s shares are off 18% since Blackstone bought Freescale.
The private equity guys aren’t perfect. They were able to do extensive due diligence on Freescale and they still missed that Motorola’s woes were going to hurt it. Ordinarily, Blackstone would have plenty of time to make things right at Freesscale and for its portfolio. But now Blackstone has its own public-market investors to deal with. They get to vote every day, as opposed to institutional investors in Blackstone’s funds, which are committed for years. Retail investors seem to be voting with their feet for now.
With Blackstone giving it’s founders 400 million to cover their tax expenses related to the 2.6 billion they got by cashing out to the public, I would say that treating shareholders fairly is absolutely the farthest thing from Blackstone management’s mind. The only way I would ever own this stock is if management paid me 30 bucks a share to hold it.
Yes, those finicky shareholders. They have a funny thing about making money today. I ‘m not certain they’ll be too interested with seeing ‘40′ :down the road.
some one please tell me whether it’s time to buy or sell or hold on to BX — I am loosing lot of money if I sell at 25+ but then I do not know if it will still go down.
Listen to Bill Miller from Legg Mason. The winner is the one who has the gut to buy low
Wow, thanks for the guarantee. Yes, I would bet that at some point in the future, whether 10 weeks or 20 years, Blackstone will come back above 40.
A few more points down and then jump in with both feet. Now I that I said that the time to buy is Monday as I am always wrong.
What I’d like to know is in many of these buyouts where significant premiums are attached, were there multiple bidders that drove the price up? I have a hard time believing that a company such as Hilton, for example, can attract multiple bidders: there ain’t that many players in the field big enough to begin with, and it’s nigh impossible for everyone big enough to be eyeing the same acquisition targets, or possess the same level of expertise… Hence, a lot of these acquisitions seem like hogwash to me – it’s like invading a Middle Eastern country: can you do it? Of course. Will you make it? Hell, no.
Great buy at this price….. guarentee it will come back above 40
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Wall Street watchers think of capital markets and financial players out west as being on the "other" coast. That's not how it's viewed in the Pacific time zone. From the venture capitalists of Sand Hill Road to the bond kingpins of Orange County to the corporate finance department at a certain software company in Redmond, Wash., there's plenty going on "out there." Adam Lashinsky should know. A native of Chicago, he has covered West Coast finance for a decade, with an emphasis on money matters in Silicon Valley. If it involves money and it's happening west of the Mississippi, look for it in Go West. 
The reason this stock is falling is because it’s a long-term investment. Blackstone makes it’s money during tough market conditions, such as the current credit market which causes good companies to become undervalued. Those who are selling now don’t relize that these uncertain times are great for Blackstone. The stock won’t gain back all of its losses in a few months, but in a few years, the sky is the limit.