BLACKSTONE GROUP LP BX
July 18, 2014 - 10:19am EST by
Shoe
2014 2015
Price: 33.84 EPS $3.59 $3.51
Shares Out. (in M): 1,141 P/E 9.4x 9.6x
Market Cap (in $M): 38,611 P/FCF 14.6x 13.8x
Net Debt (in $M): 7,678 EBIT 3,050 3,248
TEV ($): 30,932 TEV/EBIT 10.4x 9.2x

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  • Asset Management
  • Real Estate
  • Private Equity (PE)
  • Blackstone
 

Description

 

Blackstone (ticker BX) – long                

Upside: +35-40% from $33.84

 

Quick Pitch

-          BX is the leading alternative asset-manager

-          It’s cheap (especially versus traditional asset managers), despite having long term secular tailwinds and top tier management & operations

 

Business Overview

-          Consistent top performance across business lines (real estate, fund of HFs, private equity, and credit)

-          Segments

  • Private Equity ($66bn AUM, 24% of total)
    • Even their worst fund vintages – i.e. 2000 and 2006 – achieved 6% and 7% net IRRs respectively
    • $1.5bn 2013 revenues, $741mm 2013 Economic Net Income
  • Real Estate ($83bn AUM, 30% of total)
    • 17% net IRRs across their real estate funds, which invest around the world
    • $3.2bn in 2013 revenues, $2bn  ENI < they had a great year of realizations / distributions
  • Blackstone Alternative Asset Management - a.k.a. fund of hedge funds ($61bn of AUM, 22% of total)
    • $650mm revenues, $376mm ENI
    • Commingled products, customer accounts, HF GP interests,  long only, mutual fund)
  • Credit ($69bn AUM, 25% of total)
    • $880mm revenues, $358mm ENI
    • GSO, CLOs, mezz funds, rescue lending, customized strategies
  • Advisory (basically investment banking)
    • $420mm revenues, $76mm ENI

 

Bull Case / Positives

-          Long-term growth:

  • 23% AUM CAGR from 2005 to 2013 (25-30% growth in each of the last 4 years)
    • Now $272bn as of Q1 2014
  • 13% ENI (and ENI/share) CAGR since 2005

-          Leading franchise and reputation

  • Difficult to replicate their scale, breadth, expertise, track record, and depth; which they’ve utilized to expand into areas such as secondary fund investing, hedge funds, seeding, special situations, residential housing, BDCs, mortgage REITs, mutual funds, ETFs, energy (e.g. Cheniere – LNG), CLO consolidation / equity, shipping, spectrum, etc.
  • On the leading edge of new opportunities (e.g. penetrating private wealth management & ‘tactical opportunities’ funds), while other PE firms constantly play catch up

-          Secular tailwinds:

  • Investors are shifting more allocations towards alternatives, and the big keep getting bigger
  • Blackstone is also filling the void after capital for illiquid investments has shrunk – as investment banks and HFs pull back post 2008  
  • LPs increasingly want to deal with fewer managers, and can let BX allocate their investment dollars as they see fit
  • LPs realize that liquidity is a ‘resource’ that they can ‘spend’ in pursuit of higher return

-          Operational expertise

  • BX’s private equity and commercial real estate groups have experienced operators and industry experts, which allow them to add value through their projects, companies, etc.
  • Executive advisors, functional experts, alignment of interests, and the Blackstone umbrella help improve operations

-          Management: Stephen Schwarzman (co-founder and CEO)

  • Steve continues to lead the firm and drive best in class growth and performance (usually without resorting to acquisitions)
  • He owns $7.8bn of BX stock (out of his total $10.8bn net worth) so clearly he is highly incentivized to drive BX’s numbers and stock higher (which he tries to do at every opportunity).  Here’s a perennial cheerleader

-          High dividend yield

  • Currently yielding 6.8% based on 2014 expected distributions (with the stock at $33.84)
  • BX is structured as a partnership and is treated as such for tax purposes

-          Current valuation:

  • Trading at 9.4x 2014 ENI, Blackstone is relatively cheap vs. other traditional asset managers trading at 18x 2014 EPS
  • At 10.4x 2014 EV/EBITDA, again BX is cheap vs. traditional asset managers at ~11-13x EV/2014 EBITDA
  • SOTP
    • Management-fee-related earnings in 2015 of $0.77 at 18x multiple = $13.88
    • Net investments / cash on the balance sheet = $5.43
    • Performance Fee related  earnings of $2.37 at 6x = $14.22
    • Total = $33.54, around where it is now
  • Dividend yield 6.8%

-          Price target:

  • Even at 13x 2015 ENI, the stock is worth $45.50,  +35% upside
  • Using a Dividend Discount Model, assuming
    • They can compound ENI at 11.5%
    • 55% of ENI is distributed
    • 10.5% discount rate
    • 3% terminal growth
    • BX is worth $47.50,  or 40% upside
  • Long-term growth
    • If BX can keep compounding ENI & DE at around 11-12% and pay a ~5-6% dividend yield, over time, that is a ~17% annual return (assuming a stable multiple)
  • SOTP
    • 22x 2015 management-fee-related earnings of $0.77 = $18.50
      • Since much of Blackstone’s management fee income is locked-up / guaranteed, BX’s management fee related earnings should trade at a premium to traditional asset managers. 
    • 9x performance fees = $21.33
    • Plus $5.76 net cash/investments (cash and principal investments across their funds)
    • Total = $43.25,  +35% upside 

 

 

Bear Case / Negatives

-          Cyclicality / high beta:

  • Given that much of Blackstone’s earnings emanate from carry funds, they need to be able to sell or IPO their holdings to realize performance fees, and hence need healthy markets in order to generate sizeable distributions
  • That being said, their funds have performed well across the cycle
    • In periods of stress, they simply won’t sell; meanwhile, they can invest in attractive opportunities

-          Are they too big?

  • They’ve continued to execute and operate very well, so not yet 
  • They consistently expand into other assets, strategies, geographies, etc.  
    • It’s certainly not just a PE firm anymore
  • The pullback in capital to fund illiquid investments benefits BX

-          Economic Net Income

  • ENI includes unrealized earnings / gains, which isn’t as tangible as distributable earnings (DE), but is still reflective of some economic return
    • DE historically has been roughly 40-60% of ENI
  • Hence why some investors use a “SOTP” valuation and assign different multiples to management & performance fees
    • And why BX already trades at a low ENI multiple

-          Downside:

  • Just focusing on the management fee-related earnings (and putting an 18x multiple on 2015 EPS of $0.77 – inline with where traditional asset managers trade) gets to $14 in value/unit
  • Add the $5.76 in net investments & cash / unit
  • Totals ~$20 in value – vs. the stock at $33.84
  • That doesn’t include any incremental value from performance fees
    • Historically, performance fee related earnings are almost always 100-200%+ of fee related earnings (except in 2008 when it was negative)
    • Of course, there is some significant incremental value from here, at least $5 if you want to be very conservative in your discounting
    • So maybe downside of 26% to $25

 

History

-          Founded in 1985.  They started as a boutique advisory firm, then progressed into merchant banking

-          They’ve consistently grown and expanded into new areas ever since

-          BX IPOed on June 21, 2007 (rather impeccable timing) and was the first private equity firm to do so

  • At that time, it managed $88.4bn in total AUM (now has $272bn)
  • They generated $1.63 in ENI  in 2007 (which has grown at 11% CAGR since)
    • IPO price of $31 = 18x 2007 ENI

-          Position history

  • We first invested in BX in January 2013 when the stock was around $18 (currently at $33.84)

 

Financial Model

-          In 2013, BX’s PE funds and especially their real estate funds had large performance fees gains, so 2014 and beyond have tough comparisons

-          Overall, my model assumes that recent trends in performance continues, and that they grow AUM at low-teens % rates

-          BX’s payout ratio is near 100%

 

 

 

2011

2012

2013

2014

2015

2016

Revenues ($mm)

3,283.6

4,066.8

6,611.5

7,508.7

7,715.2

8,151.7

Revenue Growth

 

23.9%

62.6%

13.6%

2.7%

5.7%

EBITDA

 

857.2

1,367.7

2,158.8

3,050.4

3,248.4

3,505.9

EBITDA Growth

 

59.6%

57.8%

41.3%

6.5%

7.9%

EBITDA margin

26.1%

33.6%

32.7%

40.6%

42.1%

43.0%

 

 

 

       

 

Economic Net Income

1,539.2

1,995.3

3,513.9

4,156.9

4,072.8

4,322.3

ENI / unit

 

$1.38

$1.77

$3.07

$3.59

$3.51

$3.71

ENI / unit Growth

 

27.8%

73.8%

17.0%

-2.4%

5.8%

Units

 

1,113.0

1,129.1

1,144.1

1,156.5

1,160.5

1,164.5

P / ENI

 

24.5x

19.1x

11.0x

9.4x

9.6x

9.1x

 

 

 

       

 

Distributable Earnings

696.5

1,124.0

1,862.7

2,715.4

2,853.4

3,065.9

DE / unit

 

$0.63

$0.89

$1.54

$2.32

$2.44

$2.62

DE Growth

 

 

40.3%

74.0%

50.3%

5.3%

7.6%

Dividend yield

 

1.9%

2.6%

4.6%

6.8%

7.2%

7.8%

 

 

 

       

 

Net Cash & Investments

4,116

5,041

6,639

7,544

9,365

11,231

Net Cash & Inv / Unit

$3.73

$4.49

$5.85

$6.61

$8.21

$9.85

Net Cash & Inv Growth

 

20.5%

30.2%

13.1%

24.1%

19.9%

Market Cap

 

37,662

38,209

38,717

39,136

39,271

39,407

EV

 

33,547

33,169

32,078

31,592

29,906

28,176

EV / EBITDA

 

39.1x

24.3x

14.9x

10.4x

9.2x

8.0x

 

 

 

       

 

Stock Price

 

$33.84

 

 

 

 

 

 

 

Comp Table - i couldn't paste all the tables, so i'll just describe  them

 

-          Blackstone screens cheap on an absolute basis and relative basis vs. other alternative asset managers and especially so when compared to traditional asset managers

  • Despite their having leading growth, returns, management, innovation, diversification, and operations
  • The cloud hanging over the alternative asset managers is (understandably) the volatility of their performance fees 
    • But if they can continue to grow and outperform peers, that valuation gap should narrow

 

-          Alternative Asset Manager comp sheet

BX has a smoother 2014/2015 EPS profile than other alternative managers because BX is more diversified, while other comparables have recently gone through realization periods in their main funds

 The space is trading around 10.4x 2014 ENI, 9.4x 2015 ENI,  8.7% EV/AUM,  

7.1% 2014 dividend yield, and 7.% 2015 dividend yield  

< all in all, pretty cheap especially if  the market keeps humming 

 

-          Alternative Asset Manager – value decomposition between  management fee earnings, net value/share, and performance fee earnings

Roughly speaking, the space is trading at around 18.4x mgmt fee related earnings + net cash/accrued carry  + 4.2x performance fee earnings. 

Given that performance fee earnings are historically around 50-300%+ of management fee earnings (in practically any year), I think that having some level of performance fees is more dependable than people think

 

  

-          Traditional Asset Manager & Alternative Asset Manager Comp Sheets

    I think the alternative are way cheaper than traditional asset managers despite being better businesses.  
    You've got large traditional asset managers trading at 17x 2014 PE , and small ones trading at 22x.  < Despite having secular decline concerns

 

 

Illustrative Charts (again I couldn't paste all the pictures and charts)

-          Steve Schwarzman loves to pitch this slide in his presentations (and he likes to mention how cheap his stocks are versus traditional asset managers)

 Basically, he highlights that if BX can continue its historic growth (of 12% AUM ( 60% below their historic rate),  make 2x multiple on invested capital,   and  get 7-10% return on liquid funds:  then he can get up to $4.15 in distributable earnings,  $610bn in assets, and the total return could be $27 in dividends + a $70-104 stock if you use a 4-6% dividend yield

For a total of $96-$131 in value in 10 years

 

  • LTM distributable earnings = $1.39;  their projections imply 11.6% compound annual dividend growth over the next 10 years
  • That would imply that the NPV is ~$47.5 (40% upside) using a dividend discount model and 10.5% cost of equity, and 3% terminal growth rate

  

-          Stock Chart 

 The stock is back to where it IPOed.  Had a very long basing period  

 

- Carry Fund Details

 

MOIC = Multiple on Invested Capital


 

 

 

 

 

 

 

Unrealized Investments

 

 

Realized Investments

 

 

Total Investments

 

 

Net IRR (c)

 

Fund (Investment Period)

 

Committed
Capital ($000s)

 

 

Available
Capital (a)

 

 

Value

 

 

MOIC
(b)

 

 

%
Public

 

 

Value

 

 

MOIC
(b)

 

 

Value

 

 

MOIC
(b)

 

 

Realized

 

 

Total

 

 

 

(Dollars in Thousands, Except Where Noted)

 

Private Equity

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

BCP I (Oct 1987 / Oct 1993)

 

$

859,081

  

 

$

—  

  

 

$

—  

  

 

 

N/A

  

 

 

—  

  

 

$

1,741,738

  

 

 

2.6x

  

 

$

1,741,738

  

 

 

2.6x

  

 

 

19

 

 

19

BCP II (Oct 1993 / Aug 1997)

 

 

1,361,100

  

 

 

—  

  

 

 

—  

  

 

 

N/A

  

 

 

—  

  

 

 

3,256,819

  

 

 

2.5x

  

 

 

3,256,819

  

 

 

2.5x

  

 

 

32

 

 

32

BCP III (Aug 1997 / Nov 2002)

 

 

3,967,422

  

 

 

—  

  

 

 

—  

  

 

 

N/A

  

 

 

—  

  

 

 

9,184,688

  

 

 

2.3x

  

 

 

9,184,688

  

 

 

2.3x

  

 

 

14

 

 

14

BCOM (Jun 2000 / Jun 2006)

 

 

2,137,330

  

 

 

199,298

  

 

 

225,356

  

 

 

1.1x

  

 

 

—  

  

 

 

2,619,040

  

 

 

1.4x

  

 

 

2,844,396

  

 

 

1.3x

  

 

 

7

 

 

5

BCP IV (Nov 2002 / Dec 2005)

 

 

6,773,138

  

 

 

234,535

  

 

 

4,122,422

  

 

 

2.1x

  

 

 

66

 

 

17,167,004

  

 

 

3.1x

  

 

 

21,289,426

  

 

 

2.8x

  

 

 

46

 

 

37

BCP V (Dec 2005 / Jan 2011)

 

 

21,024,025

  

 

 

1,459,100

  

 

 

21,730,495

  

 

 

1.6x

  

 

 

46

 

 

7,982,798

  

 

 

1.3x

  

 

 

29,713,293

  

 

 

1.5x

  

 

 

5

 

 

7

BCP VI (Jan 2011 / Jan 2017)

 

 

15,176,699

  

 

 

10,440,379

  

 

 

5,149,585

  

 

 

1.3x

  

 

 

25

 

 

467,034

  

 

 

1.5x

  

 

 

5,616,619

  

 

 

1.4x

  

 

 

26

 

 

11

BEP (Aug 2011 / Aug 2017)

 

 

2,423,572

  

 

 

1,462,591

  

 

 

1,324,309

  

 

 

2.0x

  

 

 

59

 

 

218,847

  

 

 

1.4x

  

 

 

1,543,156

  

 

 

1.9x

  

 

 

20

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Corporate Private Equity

 

 

53,722,367

  

 

 

13,795,903

  

 

 

32,552,167

  

 

 

1.6x

  

 

 

45

 

 

42,637,968

  

 

 

2.1x

  

 

 

75,190,135

  

 

 

1.8x

  

 

 

20

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tactical Opportunities

 

 

4,906,599

  

 

 

3,623,819

  

 

 

1,419,729

  

 

 

1.1x

  

 

 

8

 

 

112,200

  

 

 

1.1x

  

 

 

1,531,929

  

 

 

1.1x

  

 

 

18

 

 

14

Strategic Partners

 

 

13,078,843

  

 

 

3,328,622

  

 

 

5,964,811

  

 

 

1.6x

  

 

 

N/A

  

 

 

9,280,114

  

 

 

1.3x

  

 

 

15,244,925

  

 

 

1.4x

  

 

 

N/A

  

 

 

14

Other Funds and Co-Invest (d)

 

 

1,210,951

  

 

 

150,858

  

 

 

518,118

  

 

 

0.6x

  

 

 

50

 

 

20,890

  

 

 

1.0x

  

 

 

539,008

  

 

 

0.6x

  

 

 

N/M

  

 

 

N/M

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Private Equity

 

$

72,918,760

  

 

$

20,899,202

  

 

$

40,454,825

  

 

 

1.5x

  

 

 

42

 

$

52,051,172

  

 

 

1.9x

  

 

$

92,505,997

  

 

 

1.7x

  

 

 

20

 

 

15

 

 


 

 

 

 

 

 

 

Unrealized Investments

 

 

Realized Investments

 

 

Total Investments

 

 

Net IRR (c)

 

Fund (Investment Period)

 

Committed
Capital

 

 

Available
Capital (a)

 

 

Value

 

 

MOIC
(b)

 

 

%
Public

 

 

Value

 

 

MOIC
(b)

 

 

Value

 

 

MOIC
(b)

 

 

Realized

 

 

Total

 

 

 

(Dollars in Thousands, Except Where Noted)

 

Real Estate

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

Dollar

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

Pre-BREP

 

$

140,714

  

 

$

—  

  

 

$

—  

  

 

 

N/A

  

 

 

—  

  

 

$

345,190

  

 

 

2.5x

  

 

$

345,190

  

 

 

2.5x

  

 

 

33

 

 

33

BREP I (Sep 1994 / Oct 1996)

 

 

380,708

  

 

 

—  

  

 

 

—  

  

 

 

N/A

  

 

 

—  

  

 

 

1,327,708

  

 

 

2.8x

  

 

 

1,327,708

  

 

 

2.8x

  

 

 

40

 

 

40

BREP II (Oct 1996 / Mar 1999)

 

 

1,198,339

  

 

 

—  

  

 

 

—  

  

 

 

N/A

  

 

 

—  

  

 

 

2,531,613

  

 

 

2.1x

  

 

 

2,531,613

  

 

 

2.1x

  

 

 

19

 

 

19

BREP III (Apr 1999 / Apr 2003)

 

 

1,522,708

  

 

 

—  

  

 

 

2,161

  

 

 

0.1x

  

 

 

—  

  

 

 

3,325,133

  

 

 

2.4x

  

 

 

3,327,294

  

 

 

2.4x

  

 

 

22

 

 

21

BREP IV (Apr 2003 / Dec 2005)

 

 

2,198,694

  

 

 

—  

  

 

 

1,394,262

  

 

 

1.0x

  

 

 

—  

  

 

 

3,091,303

  

 

 

2.4x

  

 

 

4,485,565

  

 

 

1.6x

  

 

 

66

 

 

14

BREP V (Dec 2005 / Feb 2007)

 

 

5,538,579

  

 

 

243,946

  

 

 

7,144,648

  

 

 

1.8x

  

 

 

—  

  

 

 

3,496,273

  

 

 

2.0x

  

 

 

10,640,921

  

 

 

1.8x

  

 

 

29

 

 

10

BREP VI (Feb 2007 / Aug 2011)

 

 

11,057,280

  

 

 

656,849

  

 

 

18,726,900

  

 

 

2.1x

  

 

 

62

 

 

3,562,643

  

 

 

2.1x

  

 

 

22,289,543

  

 

 

2.1x

  

 

 

24

 

 

14

BREP VII (Aug 2011 / Feb 2017)

 

 

14,512,884

  

 

 

5,771,958

  

 

 

10,775,482

  

 

 

1.4x

  

 

 

3

 

 

1,467,953

  

 

 

1.6x

  

 

 

12,243,435

  

 

 

1.4x

  

 

 

43

 

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Global Real Estate Funds

 

$

36,549,906

  

 

$

6,672,753

  

 

$

38,043,453

  

 

 

1.7x

  

 

 

31

 

$

19,147,816

  

 

 

2.1x

  

 

$

57,191,269

  

 

 

1.8x

  

 

 

27

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Euro

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

BREP Int’l (Jan 2001 / Sep 2005)

 

824,172

  

 

—  

  

 

104,405

  

 

 

1.2x

  

 

 

—  

  

 

1,235,480

  

 

 

2.2x

  

 

1,339,885

  

 

 

2.0x

  

 

 

25

 

 

23

BREP Int’l II (Sep 2005 / Jun 2008)

 

 

1,627,954

  

 

 

80,188

  

 

 

1,464,376

  

 

 

1.2x

  

 

 

45

 

 

198,004

  

 

 

1.2x

  

 

 

1,662,380

  

 

 

1.2x

  

 

 

3

 

 

2

BREP Europe III (Jun 2008 / Dec 2013)

 

 

3,203,848

  

 

 

633,457

  

 

 

3,590,801

  

 

 

1.5x

  

 

 

—  

  

 

 

491,882

  

 

 

1.8x

  

 

 

4,082,683

  

 

 

1.5x

  

 

 

26

 

 

17

BREP Europe IV (Sep 2013 / Mar 2019)

 

 

4,138,214

  

 

 

3,699,039

  

 

 

482,005

  

 

 

1.0x

  

 

 

—  

  

 

 

—  

  

 

 

N/A

  

 

 

482,005

  

 

 

1.0x

  

 

 

N/A

  

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Euro Real Estate Funds

 

9,794,188

  

 

4,412,684

  

 

5,641,587

  

 

 

1.3x

  

 

 

12

 

1,925,366

  

 

 

1.9x

  

 

7,566,953

  

 

 

1.4x

  

 

 

24

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BREP Co-Investment (e)

 

$

5,160,385

  

 

$

—  

  

 

$

8,424,422

  

 

 

1.8x

  

 

 

69

 

$

700,979

  

 

 

1.5x

  

 

$

9,125,401

  

 

 

1.8x

  

 

 

18

 

 

17

BREP Asia (Jun 2013 / Dec 2017)

 

 

3,247,727

  

 

 

2,695,256

  

 

 

669,067

  

 

 

1.1x

  

 

 

—  

  

 

 

—  

  

 

 

N/A

  

 

 

669,067

  

 

 

1.1x

  

 

 

N/A

  

 

 

56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Real Estate

 

$

57,682,409

  

 

$

15,432,082

  

 

$

54,719,266

  

 

 

1.6x

  

 

 

34

 

$

22,319,606

  

 

 

2.1x

  

 

$

77,038,872

  

 

 

1.8x

  

 

 

26

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BREDS I

 

$

2,840,704

  

 

$

452,965

  

 

$

1,759,288

  

 

 

1.2x

  

 

 

—  

  

 

$

2,346,502

  

 

 

1.3x

  

 

$

4,105,790

  

 

 

1.2x

  

 

 

15

 

 

12

BREDS II

 

 

3,334,676

  

 

 

2,247,733

  

 

 

1,132,398

  

 

 

1.0x

  

 

 

—  

  

 

 

—  

  

 

 

N/A

  

 

 

1,132,398

  

 

 

1.0x

  

 

 

N/A

  

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total BREDS (f)

 

$

6,175,380

  

 

$

2,700,698

  

 

$

2,891,686

  

 

 

1.1x

  

 

 

—  

  

 

$

2,346,502

  

 

 

1.3x

  

 

$

5,238,188

  

 

 

1.2x

  

 

 

15

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit (g)

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

 

     

Mezzanine

 

$

6,120,000

  

 

$

3,047,070

  

 

$

3,061,806

  

 

 

1.3x

  

 

 

—  

  

 

$

3,959,095

  

 

 

1.6x

  

 

$

7,020,901

  

 

 

1.5x

  

 

 

N/A

  

 

 

19

Rescue Lending

 

 

8,378,143

  

 

 

5,313,337

  

 

 

4,249,064

  

 

 

1.5x

  

 

 

—  

  

 

 

1,687,866

  

 

 

1.2x

  

 

 

5,936,930

  

 

 

1.4x

  

 

 

N/A

  

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

     

Total Credit

 

$

14,498,143

  

 

$

8,360,407

  

 

$

7,310,870

  

 

 

1.4x

  

 

 

—  

  

 

$

5,646,961

  

 

 

1.4x

  

 

$

12,957,831

  

 

 

1.4x

  

 

             

 

I do not hold a position of employment, directorship, or consultancy with the issuer.
I and/or others I advise hold a material investment in the issuer's securities.

Catalyst

- Continued solid fund performance (like BCP finally cross into catch up mode)
- Continued fund raising
- Expansion into new assets classes, strategies, geographies, etc. (like their foray into HFs)
- Dividends and more distributable earnings 
- Continued investor familiarity with BX & alternative through an entire cycle.   They have short histories as public companies
    sort by   Expand   New

    Description

     

    Blackstone (ticker BX) – long                

    Upside: +35-40% from $33.84

     

    Quick Pitch

    -          BX is the leading alternative asset-manager

    -          It’s cheap (especially versus traditional asset managers), despite having long term secular tailwinds and top tier management & operations

     

    Business Overview

    -          Consistent top performance across business lines (real estate, fund of HFs, private equity, and credit)

    -          Segments

     

    Bull Case / Positives

    -          Long-term growth:

    -          Leading franchise and reputation

    -          Secular tailwinds:

    -          Operational expertise

    -          Management: Stephen Schwarzman (co-founder and CEO)

    -          High dividend yield

    -          Current valuation:

    -          Price target:

     

     

    Bear Case / Negatives

    -          Cyclicality / high beta:

    -          Are they too big?

    -          Economic Net Income

    -          Downside:

     

    History

    -          Founded in 1985.  They started as a boutique advisory firm, then progressed into merchant banking

    -          They’ve consistently grown and expanded into new areas ever since

    -          BX IPOed on June 21, 2007 (rather impeccable timing) and was the first private equity firm to do so

    -          Position history

     

    Financial Model

    -          In 2013, BX’s PE funds and especially their real estate funds had large performance fees gains, so 2014 and beyond have tough comparisons

    -          Overall, my model assumes that recent trends in performance continues, and that they grow AUM at low-teens % rates

    -          BX’s payout ratio is near 100%

     

     

     

    2011

    2012

    2013

    2014

    2015

    2016

    Revenues ($mm)

    3,283.6

    4,066.8

    6,611.5

    7,508.7

    7,715.2

    8,151.7

    Revenue Growth

     

    23.9%

    62.6%

    13.6%

    2.7%

    5.7%

    EBITDA

     

    857.2

    1,367.7

    2,158.8

    3,050.4

    3,248.4

    3,505.9

    EBITDA Growth

     

    59.6%

    57.8%

    41.3%

    6.5%

    7.9%

    EBITDA margin

    26.1%

    33.6%

    32.7%

    40.6%

    42.1%

    43.0%

     

     

     

           

     

    Economic Net Income

    1,539.2

    1,995.3

    3,513.9

    4,156.9

    4,072.8

    4,322.3

    ENI / unit

     

    $1.38

    $1.77

    $3.07

    $3.59

    $3.51

    $3.71

    ENI / unit Growth

     

    27.8%

    73.8%

    17.0%

    -2.4%

    5.8%

    Units

     

    1,113.0

    1,129.1

    1,144.1

    1,156.5

    1,160.5

    1,164.5

    P / ENI

     

    24.5x

    19.1x

    11.0x

    9.4x

    9.6x

    9.1x

     

     

     

           

     

    Distributable Earnings

    696.5

    1,124.0

    1,862.7

    2,715.4

    2,853.4

    3,065.9

    DE / unit

     

    $0.63

    $0.89

    $1.54

    $2.32

    $2.44

    $2.62

    DE Growth

     

     

    40.3%

    74.0%

    50.3%

    5.3%

    7.6%

    Dividend yield

     

    1.9%

    2.6%

    4.6%

    6.8%

    7.2%

    7.8%

     

     

     

           

     

    Net Cash & Investments

    4,116

    5,041

    6,639

    7,544

    9,365

    11,231

    Net Cash & Inv / Unit

    $3.73

    $4.49

    $5.85

    $6.61

    $8.21

    $9.85

    Net Cash & Inv Growth

     

    20.5%

    30.2%

    13.1%

    24.1%

    19.9%

    Market Cap

     

    37,662

    38,209

    38,717

    39,136

    39,271

    39,407

    EV

     

    33,547

    33,169

    32,078

    31,592

    29,906

    28,176

    EV / EBITDA

     

    39.1x

    24.3x

    14.9x

    10.4x

    9.2x

    8.0x

     

     

     

           

     

    Stock Price

     

    $33.84

     

     

     

     

     

     

     

    Comp Table - i couldn't paste all the tables, so i'll just describe  them

     

    -          Blackstone screens cheap on an absolute basis and relative basis vs. other alternative asset managers and especially so when compared to traditional asset managers

     

    -          Alternative Asset Manager comp sheet

    BX has a smoother 2014/2015 EPS profile than other alternative managers because BX is more diversified, while other comparables have recently gone through realization periods in their main funds

     The space is trading around 10.4x 2014 ENI, 9.4x 2015 ENI,  8.7% EV/AUM,  

    7.1% 2014 dividend yield, and 7.% 2015 dividend yield  

    < all in all, pretty cheap especially if  the market keeps humming 

     

    -          Alternative Asset Manager – value decomposition between  management fee earnings, net value/share, and performance fee earnings

    Roughly speaking, the space is trading at around 18.4x mgmt fee related earnings + net cash/accrued carry  + 4.2x performance fee earnings. 

    Given that performance fee earnings are historically around 50-300%+ of management fee earnings (in practically any year), I think that having some level of performance fees is more dependable than people think

     

      

    -          Traditional Asset Manager & Alternative Asset Manager Comp Sheets

     

     

    Illustrative Charts (again I couldn't paste all the pictures and charts)

    -          Steve Schwarzman loves to pitch this slide in his presentations (and he likes to mention how cheap his stocks are versus traditional asset managers)

     Basically, he highlights that if BX can continue its historic growth (of 12% AUM ( 60% below their historic rate),  make 2x multiple on invested capital,   and  get 7-10% return on liquid funds:  then he can get up to $4.15 in distributable earnings,  $610bn in assets, and the total return could be $27 in dividends + a $70-104 stock if you use a 4-6% dividend yield

    For a total of $96-$131 in value in 10 years

     

      

    -          Stock Chart 

     The stock is back to where it IPOed.  Had a very long basing period  

     

    - Carry Fund Details

     

    MOIC = Multiple on Invested Capital


     

     

     

     

     

     

     

    Unrealized Investments

     

     

    Realized Investments

     

     

    Total Investments

     

     

    Net IRR (c)

     

    Fund (Investment Period)

     

    Committed
    Capital ($000s)

     

     

    Available
    Capital (a)

     

     

    Value

     

     

    MOIC
    (b)

     

     

    %
    Public

     

     

    Value

     

     

    MOIC
    (b)

     

     

    Value

     

     

    MOIC
    (b)

     

     

    Realized

     

     

    Total

     

     

     

    (Dollars in Thousands, Except Where Noted)

     

    Private Equity

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

    BCP I (Oct 1987 / Oct 1993)

     

    $

    859,081

      

     

    $

    —  

      

     

    $

    —  

      

     

     

    N/A

      

     

     

    —  

      

     

    $

    1,741,738

      

     

     

    2.6x

      

     

    $

    1,741,738

      

     

     

    2.6x

      

     

     

    19

     

     

    19

    BCP II (Oct 1993 / Aug 1997)

     

     

    1,361,100

      

     

     

    —  

      

     

     

    —  

      

     

     

    N/A

      

     

     

    —  

      

     

     

    3,256,819

      

     

     

    2.5x

      

     

     

    3,256,819

      

     

     

    2.5x

      

     

     

    32

     

     

    32

    BCP III (Aug 1997 / Nov 2002)

     

     

    3,967,422

      

     

     

    —  

      

     

     

    —  

      

     

     

    N/A

      

     

     

    —  

      

     

     

    9,184,688

      

     

     

    2.3x

      

     

     

    9,184,688

      

     

     

    2.3x

      

     

     

    14

     

     

    14

    BCOM (Jun 2000 / Jun 2006)

     

     

    2,137,330

      

     

     

    199,298

      

     

     

    225,356

      

     

     

    1.1x

      

     

     

    —  

      

     

     

    2,619,040

      

     

     

    1.4x

      

     

     

    2,844,396

      

     

     

    1.3x

      

     

     

    7

     

     

    5

    BCP IV (Nov 2002 / Dec 2005)

     

     

    6,773,138

      

     

     

    234,535

      

     

     

    4,122,422

      

     

     

    2.1x

      

     

     

    66

     

     

    17,167,004

      

     

     

    3.1x

      

     

     

    21,289,426

      

     

     

    2.8x

      

     

     

    46

     

     

    37

    BCP V (Dec 2005 / Jan 2011)

     

     

    21,024,025

      

     

     

    1,459,100

      

     

     

    21,730,495

      

     

     

    1.6x

      

     

     

    46

     

     

    7,982,798

      

     

     

    1.3x

      

     

     

    29,713,293

      

     

     

    1.5x

      

     

     

    5

     

     

    7

    BCP VI (Jan 2011 / Jan 2017)

     

     

    15,176,699

      

     

     

    10,440,379

      

     

     

    5,149,585

      

     

     

    1.3x

      

     

     

    25

     

     

    467,034

      

     

     

    1.5x

      

     

     

    5,616,619

      

     

     

    1.4x

      

     

     

    26

     

     

    11

    BEP (Aug 2011 / Aug 2017)

     

     

    2,423,572

      

     

     

    1,462,591

      

     

     

    1,324,309

      

     

     

    2.0x

      

     

     

    59

     

     

    218,847

      

     

     

    1.4x

      

     

     

    1,543,156

      

     

     

    1.9x

      

     

     

    20

     

     

    55

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Corporate Private Equity

     

     

    53,722,367

      

     

     

    13,795,903

      

     

     

    32,552,167

      

     

     

    1.6x

      

     

     

    45

     

     

    42,637,968

      

     

     

    2.1x

      

     

     

    75,190,135

      

     

     

    1.8x

      

     

     

    20

     

     

    16

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Tactical Opportunities

     

     

    4,906,599

      

     

     

    3,623,819

      

     

     

    1,419,729

      

     

     

    1.1x

      

     

     

    8

     

     

    112,200

      

     

     

    1.1x

      

     

     

    1,531,929

      

     

     

    1.1x

      

     

     

    18

     

     

    14

    Strategic Partners

     

     

    13,078,843

      

     

     

    3,328,622

      

     

     

    5,964,811

      

     

     

    1.6x

      

     

     

    N/A

      

     

     

    9,280,114

      

     

     

    1.3x

      

     

     

    15,244,925

      

     

     

    1.4x

      

     

     

    N/A

      

     

     

    14

    Other Funds and Co-Invest (d)

     

     

    1,210,951

      

     

     

    150,858

      

     

     

    518,118

      

     

     

    0.6x

      

     

     

    50

     

     

    20,890

      

     

     

    1.0x

      

     

     

    539,008

      

     

     

    0.6x

      

     

     

    N/M

      

     

     

    N/M

      

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Private Equity

     

    $

    72,918,760

      

     

    $

    20,899,202

      

     

    $

    40,454,825

      

     

     

    1.5x

      

     

     

    42

     

    $

    52,051,172

      

     

     

    1.9x

      

     

    $

    92,505,997

      

     

     

    1.7x

      

     

     

    20

     

     

    15

     

     


     

     

     

     

     

     

     

    Unrealized Investments

     

     

    Realized Investments

     

     

    Total Investments

     

     

    Net IRR (c)

     

    Fund (Investment Period)

     

    Committed
    Capital

     

     

    Available
    Capital (a)

     

     

    Value

     

     

    MOIC
    (b)

     

     

    %
    Public

     

     

    Value

     

     

    MOIC
    (b)

     

     

    Value

     

     

    MOIC
    (b)

     

     

    Realized

     

     

    Total

     

     

     

    (Dollars in Thousands, Except Where Noted)

     

    Real Estate

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

    Dollar

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

    Pre-BREP

     

    $

    140,714

      

     

    $

    —  

      

     

    $

    —  

      

     

     

    N/A

      

     

     

    —  

      

     

    $

    345,190

      

     

     

    2.5x

      

     

    $

    345,190

      

     

     

    2.5x

      

     

     

    33

     

     

    33

    BREP I (Sep 1994 / Oct 1996)

     

     

    380,708

      

     

     

    —  

      

     

     

    —  

      

     

     

    N/A

      

     

     

    —  

      

     

     

    1,327,708

      

     

     

    2.8x

      

     

     

    1,327,708

      

     

     

    2.8x

      

     

     

    40

     

     

    40

    BREP II (Oct 1996 / Mar 1999)

     

     

    1,198,339

      

     

     

    —  

      

     

     

    —  

      

     

     

    N/A

      

     

     

    —  

      

     

     

    2,531,613

      

     

     

    2.1x

      

     

     

    2,531,613

      

     

     

    2.1x

      

     

     

    19

     

     

    19

    BREP III (Apr 1999 / Apr 2003)

     

     

    1,522,708

      

     

     

    —  

      

     

     

    2,161

      

     

     

    0.1x

      

     

     

    —  

      

     

     

    3,325,133

      

     

     

    2.4x

      

     

     

    3,327,294

      

     

     

    2.4x

      

     

     

    22

     

     

    21

    BREP IV (Apr 2003 / Dec 2005)

     

     

    2,198,694

      

     

     

    —  

      

     

     

    1,394,262

      

     

     

    1.0x

      

     

     

    —  

      

     

     

    3,091,303

      

     

     

    2.4x

      

     

     

    4,485,565

      

     

     

    1.6x

      

     

     

    66

     

     

    14

    BREP V (Dec 2005 / Feb 2007)

     

     

    5,538,579

      

     

     

    243,946

      

     

     

    7,144,648

      

     

     

    1.8x

      

     

     

    —  

      

     

     

    3,496,273

      

     

     

    2.0x

      

     

     

    10,640,921

      

     

     

    1.8x

      

     

     

    29

     

     

    10

    BREP VI (Feb 2007 / Aug 2011)

     

     

    11,057,280

      

     

     

    656,849

      

     

     

    18,726,900

      

     

     

    2.1x

      

     

     

    62

     

     

    3,562,643

      

     

     

    2.1x

      

     

     

    22,289,543

      

     

     

    2.1x

      

     

     

    24

     

     

    14

    BREP VII (Aug 2011 / Feb 2017)

     

     

    14,512,884

      

     

     

    5,771,958

      

     

     

    10,775,482

      

     

     

    1.4x

      

     

     

    3

     

     

    1,467,953

      

     

     

    1.6x

      

     

     

    12,243,435

      

     

     

    1.4x

      

     

     

    43

     

     

    30

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Global Real Estate Funds

     

    $

    36,549,906

      

     

    $

    6,672,753

      

     

    $

    38,043,453

      

     

     

    1.7x

      

     

     

    31

     

    $

    19,147,816

      

     

     

    2.1x

      

     

    $

    57,191,269

      

     

     

    1.8x

      

     

     

    27

     

     

    17

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Euro

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

    BREP Int’l (Jan 2001 / Sep 2005)

     

    824,172

      

     

    —  

      

     

    104,405

      

     

     

    1.2x

      

     

     

    —  

      

     

    1,235,480

      

     

     

    2.2x

      

     

    1,339,885

      

     

     

    2.0x

      

     

     

    25

     

     

    23

    BREP Int’l II (Sep 2005 / Jun 2008)

     

     

    1,627,954

      

     

     

    80,188

      

     

     

    1,464,376

      

     

     

    1.2x

      

     

     

    45

     

     

    198,004

      

     

     

    1.2x

      

     

     

    1,662,380

      

     

     

    1.2x

      

     

     

    3

     

     

    2

    BREP Europe III (Jun 2008 / Dec 2013)

     

     

    3,203,848

      

     

     

    633,457

      

     

     

    3,590,801

      

     

     

    1.5x

      

     

     

    —  

      

     

     

    491,882

      

     

     

    1.8x

      

     

     

    4,082,683

      

     

     

    1.5x

      

     

     

    26

     

     

    17

    BREP Europe IV (Sep 2013 / Mar 2019)

     

     

    4,138,214

      

     

     

    3,699,039

      

     

     

    482,005

      

     

     

    1.0x

      

     

     

    —  

      

     

     

    —  

      

     

     

    N/A

      

     

     

    482,005

      

     

     

    1.0x

      

     

     

    N/A

      

     

     

    4

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Euro Real Estate Funds

     

    9,794,188

      

     

    4,412,684

      

     

    5,641,587

      

     

     

    1.3x

      

     

     

    12

     

    1,925,366

      

     

     

    1.9x

      

     

    7,566,953

      

     

     

    1.4x

      

     

     

    24

     

     

    10

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    BREP Co-Investment (e)

     

    $

    5,160,385

      

     

    $

    —  

      

     

    $

    8,424,422

      

     

     

    1.8x

      

     

     

    69

     

    $

    700,979

      

     

     

    1.5x

      

     

    $

    9,125,401

      

     

     

    1.8x

      

     

     

    18

     

     

    17

    BREP Asia (Jun 2013 / Dec 2017)

     

     

    3,247,727

      

     

     

    2,695,256

      

     

     

    669,067

      

     

     

    1.1x

      

     

     

    —  

      

     

     

    —  

      

     

     

    N/A

      

     

     

    669,067

      

     

     

    1.1x

      

     

     

    N/A

      

     

     

    56

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Real Estate

     

    $

    57,682,409

      

     

    $

    15,432,082

      

     

    $

    54,719,266

      

     

     

    1.6x

      

     

     

    34

     

    $

    22,319,606

      

     

     

    2.1x

      

     

    $

    77,038,872

      

     

     

    1.8x

      

     

     

    26

     

     

    16

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    BREDS I

     

    $

    2,840,704

      

     

    $

    452,965

      

     

    $

    1,759,288

      

     

     

    1.2x

      

     

     

    —  

      

     

    $

    2,346,502

      

     

     

    1.3x

      

     

    $

    4,105,790

      

     

     

    1.2x

      

     

     

    15

     

     

    12

    BREDS II

     

     

    3,334,676

      

     

     

    2,247,733

      

     

     

    1,132,398

      

     

     

    1.0x

      

     

     

    —  

      

     

     

    —  

      

     

     

    N/A

      

     

     

    1,132,398

      

     

     

    1.0x

      

     

     

    N/A

      

     

     

    11

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total BREDS (f)

     

    $

    6,175,380

      

     

    $

    2,700,698

      

     

    $

    2,891,686

      

     

     

    1.1x

      

     

     

    —  

      

     

    $

    2,346,502

      

     

     

    1.3x

      

     

    $

    5,238,188

      

     

     

    1.2x

      

     

     

    15

     

     

    12

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Credit (g)

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

     

         

    Mezzanine

     

    $

    6,120,000

      

     

    $

    3,047,070

      

     

    $

    3,061,806

      

     

     

    1.3x

      

     

     

    —  

      

     

    $

    3,959,095

      

     

     

    1.6x

      

     

    $

    7,020,901

      

     

     

    1.5x

      

     

     

    N/A

      

     

     

    19

    Rescue Lending

     

     

    8,378,143

      

     

     

    5,313,337

      

     

     

    4,249,064

      

     

     

    1.5x

      

     

     

    —  

      

     

     

    1,687,866

      

     

     

    1.2x

      

     

     

    5,936,930

      

     

     

    1.4x

      

     

     

    N/A

      

     

     

    18

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

         

     

         

    Total Credit

     

    $

    14,498,143

      

     

    $

    8,360,407

      

     

    $

    7,310,870

      

     

     

    1.4x

      

     

     

    —  

      

     

    $

    5,646,961

      

     

     

    1.4x

      

     

    $

    12,957,831

      

     

     

    1.4x

      

     

                 

     

    I do not hold a position of employment, directorship, or consultancy with the issuer.
    I and/or others I advise hold a material investment in the issuer's securities.

    Catalyst

    - Continued solid fund performance (like BCP finally cross into catch up mode)
    - Continued fund raising
    - Expansion into new assets classes, strategies, geographies, etc. (like their foray into HFs)
    - Dividends and more distributable earnings 
    - Continued investor familiarity with BX & alternative through an entire cycle.   They have short histories as public companies

    Messages


    SubjectRe: PJT
    Entry10/07/2015 10:32 AM
    Membercfavenger

    I've done some cursory work on it.  I think you might be using a pre-tax number for your earnings but its still fairly cheap on a taxed basis.  THe story that they can grow free from conflicts with BX and with a strong energy restructuring group appear reasonable.  I like the setup that the shares were distributed into a panicky market and people were likely to just dump a little stub posiion rather than figure out what they now owned.


    SubjectRe: Re: PJT
    Entry10/07/2015 11:35 AM
    Memberaaron16

    everyone - thanks for the comments, they are very helpful. As I mentioned I really have not done any diligence yet.

    However just a few things for thought:

    Don't we need to make some assumption around what PJT and his gang are bringing to the party as well if we were to adjust for 2014 / sales & pro-forma earnings?  My reading of Form-10 was we were just looking at BX historicaly advisory business ex capital markets - not the combined entity.

    But as mentioned on go-forward basis the cyclicality etc make earnings a complete guess. What caught my eye was what appeared to be an attractive set-up with the distribution ratio etc. 

     

     


    SubjectRe: Re: Re: PJT
    Entry10/07/2015 01:47 PM
    Membercfavenger

    Did you look at the investor presentation released as an 8k?  I believe that has additional pro-forma data. 


    SubjectRe: Re: Re: Re: PJT
    Entry10/07/2015 03:26 PM
    Memberaaron16

    I have gone through it and just flipped through it again - I think the pro-forma #'s in the presentation (slide 27 has pro-forma 2014 revenue of $401) are the same as in the form-10 which in by my read is just for the BX business. Are you seeing something different?

    Thanks for the thoughts.

     

     

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