SellSide Analysts Blow the Call on Blackstone
Blackstone has been one of the biggest generators of fees on Wall Street. That has apparently bought them a few friends:
....seven of the eight analysts who rate Blackstone recommend clients buy the stock, including Hecht. The other recommendation is a ``hold.'' Bloomberg
The love affair might soon be over; Blackstone's earnings release today leaves much to be desired and the firm seems to be writing off 2008. The analysts have been slow to get a handle on their predicament, according to Tony James:
``We're a very complicated company that the market doesn't understand,'' James said last month. ``I don't think the market understands the model or how to value the company or how to predict the results. The accounting is incredibly opaque.''
Of course, back in August Jeremy Grantham seemed to have a bead on Blackstone.
Private equity has existed for the last several years in a “perfect calm”. All the more important factors in determining success had become near perfect at the same time......
What has been almost completely missed, though, is the degree to which dazzling results have been enabled by rising global profit margins and leverage on easy terms. It is worth noting that it is the less efficient companies favored by private equity managers that have had the largest rises in profit margins as they do in every cycle. Unfortunately, they also have the largest declines in the down legs.
Tony James claimed a few weeks ago that he has very little need for banks:
``We’re bypassing the banks,’’ James said. ``There’s still ultimately demand for this paper out there if you can go directly to the buyers.’
With the potential for generating fees for for Schwarzman et al evaporting, conflicted analysts are sure to begin downgrading Blackstone’s stock.
Bank on it.
Blackstone Profit Falls 89% on Credit Market Meltdown
Bloomberg
Where Are the Howls From Grantham’s Growls ?
1440 Wall Street
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