It’s hard to ignore the power of Blackstone and its almost infinite tentacles that stretch across the private-equity universe.
Shares have returned over 160% since my last public article about it.
This success comes with the help of a fortress balance sheet, exceptional management team, and access to amazing deals.
This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Learn More »
kjschoen/iStock Unreleased via Getty Images My last publicly visible article on Blackstone Inc. (NYSE: BX ) was in December 2019. Since then, shares have returned over 160%!
And I’m very happy to say I’ve been long the name along that way. (Source: Yahoo Finance)
As a real estate investor, it’s hard to ignore Blackstone. It has almost infinite tentacles that stretch across the private equity universe, making it an absolute powerhouse.
Based on committed capital, this behemoth is both the world’s largest private equity firm and alternative investment firm. It currently sports total assets under management (AUM) of around $731 billion.
That’s an industry record and up 25% year-over-year in Q3.
On that earnings call, Chairman and CEO Stephen A. Schwarzman said Blackstone is “ creating the foundation for a dramatically more profitable firm, further widening the competitive moat around our business.”
Now, as the CEO of Wide Moat Research, you know I love to see wide-moat businesses – especially in the real estate arena. And Blackstone has certainly built a world-class real estate firm, with a phenomenal portfolio of alternative assets. These include insurance, infrastructure, and tactical opportunities.
And all from a company that began with $400,000.
In his book, What It Takes , Schwarzman offers “lessons for how to think about ambition and scale, risk and opportunities, and how to achieve success through the relentless pursuit of excellence.”
This is by reflecting on reflecting on his own experiences and providing “a practical blueprint for success.” Blackstone Knows Its Realm and How to Maximize Its Benefits
You may recall an article I wrote back in June 2019 . I explained in it how Blackstone was removing certain restrictions by eliminating its K-1 tax forms.
This allowed everyday investors to receive 1099s while getting rid of effective connected income (“ECI”) and unrelated business income tax (“UBTI”). “This made it possible for the stock to become eligible for inclusion on CRSP, MSCI, and Total Market indices. By officially converting to a corporation on July 1, 2019 – thereby unhampering long-only and index/ETF investors – Blackstone said it could double in size to $9 trillion.” Based on Q3-21 results, it’s not hard to see that this global powerhouse is well on that way. (Source: BX Filings)
Schwarzman explained on the call that: “Blackstone is the world’s largest alternative asset manager. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. “We do this by using extraordinary people and flexible capital to help companies solve problems. Our $731 billion in assets under management include investment vehicles focused on private equity, real estate, public debt and equity, life sciences, growth equity, opportunistic, non-investment grade credit, real assets, and secondary funds, all on a global basis.” And that is certainly working considering how the company’s Q3 results topped almost everything else in its 36-year history . Earnings increased dramatically, and all key financial and capital metrics reached record or near-record levels. The company has set the stage to accelerate its business model . And it “continues to deliver outstanding investment performance for limited partners, with the third quarter capping the best 12-month period for fund appreciation.” A Closer Look at Blackstone’s Segments
Blackstone’s diverse assortment of funds make private equity, real estate, credit, and hedge fund investments around the world. The company also provides investment advice and management services to institutional investors through separately managed accounts.All told, it offers 16 perpetual vehicles that generated nearly half of total Inflows over the last 12 months. And its active pace of deployment is accelerating its fundraising cycle for some of its largest flagship funds.In Schwarzman’s words, “The overall outlook for fundraising is incredibly strong.” Blackstone’s flagship strategies have consistently outperformed the relevant benchmarks across market cycles, including the most recent one. Schwarzman added: “In an environment that continues to be deeply impacted by the pandemic over the last 12 months, our corporate private equity funds have appreciated 49%, while our opportunistic real estate funds appreciated 36%. “This remarkable performance is the result of the way we’ve positioned […]