How far BX can go? A market cap thought..
Current Market Cap of Blackstone is 14.61B
Current Market Cap of Goldman Sachs is 84.84B
Goldman makes per year approximately $12 Billion net profit?
GS Net Profit/Market Cap (12/84) = 14%
How much blackstone make per year? Not very sure.
Let's say Blackstone makes net profit of $1 Billion per year? Are they making that much presently?
BX Net Profit/Market Cap (1/14) = 7%
If the above case is true BX is selling at 100% premium to Goldman Sachs. (BX should sell at $7 or alternatively GS should sell at 320 today :) )
If BX make a net profit of $2 Billion, they are almost at the same value. $14 is justifiable for BX.
I would highly recommend to buy Goldman, they will have lots cash down the lane + they will buy back probably from next year on. Also, Goldman has returned to its Pre-bailout levels - somewhat. While BX is languishing at < 50% of the IPO
No question, Blackstone knows how to make money (starting with the guys at the wheel though..). Blackstone has to prove the profits..The big question will be how much they will make per year to support the stock.
(Note. If Blackstone buy back the shares, it will sure help all holders). May be bonds will be used for that? Or if the CEO forgoes some of his BIG cut - directly from the IPO hapless victims, that could help as well. He could gather some goodwill too. IPO viticms has been suffering for 2 years now. I would say let CEO forgo his further equity grants, and let him buy it from the market with the $700 million or so he received last year.
I guess it is like you went to a fish market and bought a well wrapped (stinking) fish for a high price. Store CEO is holding the cash, the IPO viticms are holding the stinking fish. These are perishable products with no return policy.
Also, verify/correct the numbers I'm quoting.
Where can BX go from here, i feel that the stock price is supported by the dividend to a large extent, however there wont be any priority distributions to the IPO losers - come next year. In other words, If they make some money and feel some sympathy to you they may give some..
There was a comment by an analyst in barrons regarding private equity sometime back.
Private equity people bring experience to the table and you bring money to the table
You walk out with experience and private equity people walk out with money.
Blackstone a $14 Billion company - for what reason?
Blackstone personnel and others who hold Blackstone Holdings partnership units will not receive any distributions (other than tax distributions under certain specified circumstances) for a year unless and until our common unitholders receive aggregate distributions of $1.20 per common unit for such year. We do not intend to maintain this priority allocation after December 31, 2009.
You don't get it. It is not easy to understand BX ownership structure.
Repeat..what you see in zacks or yahoo or anywhere else is representing the public units + china (pretty much). That totally is less than quarter of the company.
The BX IPO sold only < 25% of the company to the outsiders. Not 100%.
You have to mutiply that number by 4 to get close the real market cap number which is 14.61 Billion.
Now you get it?
Read all my posts and links carefully, if you want a clear picture.
--Keep your expectations in check--Higher the market cap higher the profit BX should generate--At least 14% by Goldman Sachs Standards!--
if the share price to become $20, the total market value of BX will be 21Billion
if the share price to become $25, the total market value of BX will be 27Billion
if the share price to become $30, the total market value of BX will be 32Billion
if the share price to become $35, the total market value of BX will be 37Billion
if the share price to become $50, the total market value of BX will be 54Billion
Your numbers are wrong.
Market Cap of BX is $4.2B.
270M outstanding shares.
$29 Billion in cash waiting to be invested.
Current Share Price is $13.00.
Currently BX pays div of $1.20 (almost 10% at today's share price).
BX will be over $20/share within the next 12 months and will be between $80 and $300 per share by 2020. (and you'll make 100% of your investment back in divs during that time if you buy today).
I guess I'm right with the market cap number (BX - 14.56B). What yahoo shows is the public unit holder info it seems. You should add - CEO owns approx 25%, Chinese some 12% rest is all insiders. Public owns almost 25%, almost same as that of CEO.
Follow this link for the correct Market Cap info.
I'm not sure about your forecasts. As I mentioned before, one probably will make decent return on BX (much better return will be on Goldman Sachs though). But the CEO and the gang need to prove the profit viability and bring some legibility to the table.
The insiders shouldn't act like roadside bandits who took all possible money from the IPO victims.
Return some of that money to the IPO victims by either forgoing further equity grants or do some buy back from personal accounts.
CEO and team, Get some goodwill - priceless..
PE wise we are a bit more expensive than GS. BX has higher growth estimates than GS. It depends what multiple you use. The advantage to GS is borrowing money next to nothing from the FED. That ultimately has to change. The advantage to BX is the ability to use leverage for purchasing cheap assets here. I predict both will be strong companies.
Would sure like to see an IPO to break up Hilton and start to get some profits from asset sales.
Thanks for the comments. I feel BX should not be considered superior to GS in generating profit.
When people dream about Blackstone becoming a $50 stock or higher, remember the market cap equation. If this stock hits $50 - the market cap of BX will be $55 billion. Probably it is a dream - at least for now. At $55 Billion market cap they should generate at least $8 billion annual profit. Can they?
Unless they take drastic steps to buy back the public shares (or generate extra-ordinary profits - chances for that is less in the coming 1-2 years), this stock probably will not go anywhere I guess.
I'm not telling this is a bad stock or anything. By investing in BX you may beat the market. However be aware of the realities.