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The Blackstone Group L.P. Message Board

holding38 34 posts  |  Last Activity: Apr 15, 2014 1:53 PM Member since: Jun 22, 2009
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  • Reply to

    Since announcement of two weeks ago...

    by simple_mind99 Apr 14, 2014 1:08 PM
    holding38 holding38 Apr 15, 2014 1:53 PM Flag

    Done,

    According to Yahoo Finance, at year-end 2013 (most recent figures), 303 institutional and mutual fund holders held 62% of outstanding ACAS shares. To my mind, the poor price action of ACAS stock is not due to unsophisticated shareholders, but to management's failure to follow thorough on its good news announcement by making its plans at least somewhat more specific.

    Sentiment: Buy

  • Reply to

    Question for NMB

    by foxhsmart Mar 25, 2014 1:23 PM
    holding38 holding38 Mar 31, 2014 3:06 PM Flag

    Fox,

    I can't pretend to reply with the acumen of NMB and will be awaiting his response as eagerly as you are. I am holding some of the the Jan. 15 calls and wish I could have purchased more on Friday (I did think about it) but unfortunately one needs cash to be able to buy those things. But I did want to comment on your recession frequency reference ("every 4-5 years historically").

    Historically, most recessions follow a pattern. After a few years of expansion, wage and price pressures reinforce one another and make the Fed raise interest rates. A few rate increases bring the market expansion to a close and prices turn down, anticipating the coming recession. Expansions don't die of old age, they die of rising interest rates. Precisely because this expansion has been so weak, such inflationary forces are unlikely to be present for a few more years at least. As for the likelihood of an unpredictable shock--well, that can't be predicted.

  • holding38 holding38 Mar 13, 2014 6:38 PM Flag

    Thank you NMB, for both your analysis and information, which have been a great help to all the long-time readers of this message board. I have been holding 200 ACAS Jan'15 calls since last June at @1.22, but must confess to frequent moments of doubt. I think it is clear in which direction ACAS is going--thanks in large part to your analyses and information--but the process seems to be unnecessarily dragged out; hence the moments of doubt.

    I should also thank you for your early comments on MTGE. I didn't buy early myself, but when the price came down I began accumulating at an average price of 19.26.

    Best of luck to you and to all longs.

  • Reply to

    Barclays Dire View of SDRL Today...

    by play_tow Jan 28, 2014 12:39 PM
    holding38 holding38 Jan 28, 2014 4:53 PM Flag

    Thank you pt for your reports on the views of various brokers; it is a great help to those of us who do not have access to these reports.

    I do have access to Morgan Stanley, however. To add to your comments on Morgan Stanley analyst Ole Slorer's view, his comments yesterday included the following: "Investors were spooked as NE kicked off earnings season for the offshore drillers with a soft market outlook. Despite near-term choppiness on demand slippage and increased rig availability, we believe that floater utilization should eventually pick up into 2015. We note healthy UDW fixtures in the works that have yet to be announced due to regulatory delays...In the meantime, we believe that dayrates for 6g+ and harsh environment rigs should hold better vs. 5g units. Our top pick within the subgroup remains SDRL/SDLP, where we see continued dividend growth independent of near-term day rate trajectory."

    Slorer's SDRL EPS estimates for 2013, 2014 and 2015 are $2.64 (vs. $2.66 consensus), $3.78 (vs. $3.62 consensus) and $4.28 (vs. $4.35 consensus). He sees SDRL's return on equity rising from 24.7% in 2013 to 30.4% in 2015.

    I added to my Jan 2016 calls on Friday at $2.10. It seems I overpaid a bit but I still expect a substantial return.

    Sentiment: Strong Buy

  • Reply to

    AGNC and MTGE Buybacks

    by icon0 Oct 24, 2013 11:22 AM
    holding38 holding38 Oct 24, 2013 2:25 PM Flag

    I am not certain of the accounting treatment of the buybacks and their short-term impact on the payments due ACAS. However, the best long-term result for ACAS lies in the improvement in cash flow and dividends for AGNC and MTGE. When the price of those two stocks exceeds their book values, ACAS can issue new shares, benefitting the shareholders of all three companies. The stock price of AGNC and MTGE will improve with improved financial performance (in cash flow and dividend payments per share), and by ACAM demonstrating that it is acting in the best interests of the shareholders. The buybacks contribute, appropriately, to this perception--in addition to raising per share cash flow and, at some point, dividend payments. I believe we are close to or at a floor in quarterly dividends for both AGNC and MTGE, that both companies will be reporting higher book value per share next week, and that the recovery in their share prices will continue (I hold stock in both ACAS and MTGE). Thus, even if the buybacks for MTGE and AGNC have some small-scale short-term impact on ACAS--and I am not sure they do--the long term contribution to ACAS is unambiguously positive.

    Sentiment: Strong Buy

  • holding38 holding38 Oct 18, 2013 2:52 PM Flag

    This is a continuation of my previous post, which Yahoo cut short, presumably due to its length.

    The undervaluation of ACAS will be overcome when the company's disparate parts are separated into two (or more) separate companies: a growth company asset manager and a dividend-paying business development company. I expect this to happen within 6 months.

  • holding38 holding38 Oct 18, 2013 2:42 PM Flag

    The latest Motley Fool Article focuses on just one determinant of ACAS value--interest rates. It is of course correct in pointing out that interest rates will have to rise at some point over the next few years. However, the analysis is one-dimensional. Interest rate increases typically reflect one of two major forces: a strong economy increases the demand for financial capital or inflationary pressures force the Fed to raise rates; of course these two may be overlapping. In a strengthening economy, the companies in ACAS's portfolio are likely to be doing better; the improvement in their performance could well outweigh the negative impact of rising interest rates. The impact of inflation will vary depending on the type of business involved, so there may be some offset in that case as well. Moreover, there is at present so much excess capacity in the economy and economic growth will be moderate at best over the coming years, so that inflationary threats are unlikely to be serious for some time.

    In addition to these considerations, private equity firms typically invest in companies whose performance they expect to improve before re-selling them at a higher price. If they are successful in doing so, the improved performance in a strengthening economy--much more likely to bring about higher interest rates in the next five years than inflationary pressures--should be greater than it would be in a stagnant economy, further offsetting the negative impact of higher interest rates.

    Finally, the negative impact of higher interest rates anticipated in the Motley Fool article would apply to all firms, yet most sell above book value. Thus to explain the ACAS discount from book value as a rational response to the prospect of higher interest rates does not seem adequate. In the last analysis, the discount to book value of ACAS appears tied mainly to the company's combination of two disparate businesses: asset manager and business development company.

  • A Motley Fool post on the Yahoo site of MTGE speaks well of the value of ACAS, including some detailed analysis. It should be on the ACAS site, but since it isn't, I thought I'd call attention to it.

    Sentiment: Strong Buy

  • Reply to

    acas readying new offerings etc..

    by blankwillie Aug 28, 2013 10:30 AM
    holding38 holding38 Aug 30, 2013 6:48 PM Flag

    I do not pretend to be a tax expert, but I believe that it is possible for a company to divide itself up with one or more of the surviving entities retaining the NOL. If so, a reorganization is possible before the NOL are consumed.

    Sentiment: Strong Buy

  • Reply to

    NMB - I SENT HIM AN EMAIL - A re-post

    by njonge01 Aug 30, 2013 9:26 AM
    holding38 holding38 Aug 30, 2013 6:41 PM Flag

    Thank you NMB and NJ--as usual, NMB's comments are really helpful.

    Sentiment: Strong Buy

  • Reply to

    acas readying new offerings etc..

    by blankwillie Aug 28, 2013 10:30 AM
    holding38 holding38 Aug 28, 2013 2:48 PM Flag

    Thank you so much blankwillie. It looks as though the big restructuring is finally at hand. If I understand correctly, it looks as though Blackstone Group (BX) will be the closest thing to the restructured company as an alternative asset manager. Presumably, existing shareholders will gain stakes in AC LLC as the overall manager (or AC LLC will simply remain as a wholly-owned subsidiary of ACAS), in Debt BDC in exchange for the debt assets the company is giving up (those of us eager to see a dividend again will finally see one, enhanced by the new bdc's ability to leverage its balance sheet), and possibly in the private equity funds (although this is unclear given restrictions on private equity ownership). It is possible that ACAS proper will receive payments from the new private equity funds--via AC LLC--in exchange for the equity interests it is transferring. Presumably, ACAS itself will still be able to use its tax losses going forward.

    While the details of the restructuring remain to be spelled out, this is wonderful news for shareholders.

    Sentiment: Strong Buy

  • Reply to

    One issue I have with management

    by hoopsyah Jul 30, 2013 5:25 PM
    holding38 holding38 Jul 30, 2013 6:41 PM Flag

    What you suggest would be appropriate for a conventional BDC (and there are many of those to buy if you so choose). ACAS is being managed to increase NAV and minimize debt, creating necessary conditions for it to be split into 2 or possibly 3 separate companies: an asset-management company, a traditional BDC and possibly one more. Hopefully, the conditions will established to make that possible some time next year.

    Sentiment: Strong Buy

  • Reply to

    AGNC MGMT Fees increase

    by icon0 Jul 29, 2013 4:12 PM
    holding38 holding38 Jul 29, 2013 4:51 PM Flag

    The AGNC report has been very nicely received in the after-market: at 4:34 AGNC was up $1.31 and at 4:37 MTGE was up $0.92 (MTGE reports tomorrow). The fact that the world is not ending has been nicely received. This news is extremely good for ACAS. However, I would not annualize the results for ACAS. Additional share sales for AGNC and MTGE will not be coming for awhile--until the market price shows a nice premium above book value. This is likely to take some time.

    Sentiment: Strong Buy

  • holding38 by holding38 Jul 29, 2013 4:44 PM Flag

    I'm surprised there are no comments here when the after-market is going wild with the AGNC report. As of 4:37pm, MTGE is up $0.92 at $19.30. Looks like the world didn't end after all; the MTGE report is coming tomorrow (same investment manager).

    Sentiment: Strong Buy

  • holding38 holding38 Jul 19, 2013 1:50 PM Flag

    The article discusses BX's plans to sell some of its assets into strong markets--it is not advice to sell the stock.

    Sentiment: Strong Buy

  • Reply to

    Buy back vs Dividend?

    by royjm1940 Jun 26, 2013 5:57 PM
    holding38 holding38 Jul 8, 2013 5:13 PM Flag

    Thanks ribi.

    Sentiment: Strong Buy

  • Reply to

    Buy back vs Dividend?

    by royjm1940 Jun 26, 2013 5:57 PM
    holding38 holding38 Jul 8, 2013 3:10 PM Flag

    Hi ribi, thanks so much for your always helpful analyses. I have two further concerns to which I was hoping you might respond.

    First, can the restructuring that is coming proceed before all of the tax losses are used? That is, would it be possible to spin off one part of the company without tax losses so that the spun-off part could begin paying dividends while the other part retains and continues to use the tax losses that have been carried forward?

    Second, at recent prices the discount from book value has been exceptional. I had thought that the company had the flexibility to buy back many more shares under such circumstances (and thus I was disappointed that they did not do so at the end of the last quarter), even if it meant "borrowing" from planned buybacks later in the year. Why do you think the company failed to buy back many more shares last quarter?

    I would be grateful for any insight you--or NMB or others--might be able to provide on these questions.

    Sentiment: Strong Buy

  • Reply to

    MTGE AND AGNCE and EFFECT ON ACAS BOOK VALUE

    by blankwillie Jun 3, 2013 12:12 PM
    holding38 holding38 Jun 3, 2013 9:43 PM Flag

    I would assume that AMCAP is valued at this point largely on the management of AGNC, although MTGE, additional future sales of shares of AGNC, and the future of the infrastructure and other funds should contribute more in the future. It seems to me that the recent collapse in the ACAS SP reflects a largely unthinking response to the sharp decline in the mREITs. The income and book value declines in AGNC seem to have driven the sell-off. Since it is difficult for me to value AGNC, I turned to the mREIT specialist at Morgan Stanley. Here is what I found in their report dated 5/31 and based on the 5/30 price:
    4Q12 1Q13 2Q13 3Q13 4Q13
    book value: $31.64 28.93 29.22E 29.53E 29.98E
    dividend: $ 1.25 1.25 1.25E 1.25E 1.25E

    "Valuation: Our $32 price target represents a 1.05 price-book multiple on our 4Q13 book value estimate of $30 per share, driven by stronger ROEs than agency mREIT peer group due to active asset allocation and prepayment protection."

    Price target: $32 (bull case $35, bear case $26). My account executive said to me that the specialist thinks that in the worst case the dividend might be cut to around $4 per share, but then it would start to rise again. This makes sense to me since I can imagine that rising interest rates will not be fully hedged, but over time the company's profitability depends on the interest rate spread, and I would imagine that in a higher interest rate environment, the spread might well be higher than it is today. Overall, it seems to me that even if the dividend return on AGNC falls to 15% from 19% (and then rises again), AGNC is dramatically undervalued, and when the market comes to realize that interest rates will increase modestly over time--rather than shoot to the moon--AGNC, MTGE and ACAS will recover nicely.

    Sentiment: Strong Buy

  • Reply to

    Chart pattern today looks like accumulation?

    by slegermark Jul 26, 2012 2:31 PM
    holding38 holding38 Jul 26, 2012 6:26 PM Flag

    Usually, companies cannot buy or sell stock for a few weeks before earnings are announced because they are assumed to have material information that is not yet public. I'm not sure if this is the case all the way back to the end of the previous quarter (June 30). If so, they cannot have repurchased any shares since their last announcement at the end of the June quarter.

  • Reply to

    10k

    by blankwillie Feb 27, 2012 5:15 PM
    holding38 holding38 Feb 28, 2012 7:04 PM Flag

    Of course a sale is always possible, but I would assign it a very low probability because it would be unattractive to both management and prospective purchasers. Suppose the sale price were at a hefty premium of $15 per share. If management executes, it should be at that level within a year or two anyhow, at which point ACAS could pay out 80 cents to one dollar per share in annual dividends, an amount that could increase at 7-10% per year. Alternatively, if some of the restructuring discussed takes place, that would presumably be because it would provide even greater benefits to shareholders, including senior management. From the standpoint of a purchaser, it is possible that an acquisition could be accretive to earnings, but certainly most of senior management could be expected to depart. ACAS is a company that depends heavily (almost entirely?) on an extremely talented small group of experienced senior managers. It is hard to imagine that some company would spend around $5 billion to acquire the eclectic group of assets ACAS owns without the managers to advise portfolio companies and to decide on sales and acquisitions.

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