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The Blackstone Group L.P. Message Board

holding38 51 posts  |  Last Activity: Jun 16, 2015 4:56 PM Member since: Jun 22, 2009
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  • Reply to

    good report.

    by sam_0534 Jun 16, 2015 12:14 PM
    holding38 holding38 Jun 16, 2015 4:56 PM Flag

    Thank you Sam. Just added a few days ago at $41.10. Started buying two years ago at $20.77, but the shares are still cheap. Yahoo's five-year projection of negative earnings growth doesn't make sense. The distributions will be lumpy, but the strong growth in assets under management looks set to continue, especially given the tendency of institutional investors to make their investments more concentrated. This will help Blackstone since no large alternative asset manager can match Blackstone for performance record.

    Sentiment: Strong Buy

  • holding38 holding38 Jun 2, 2015 1:41 PM Flag

    That's nuff Lucy, you're missing the point. Dilution occurs when a fixed net asset value or net income is divided among a larger number of shares. BXMT is increasing its net asset value and net income with the acquisition of additional assets. Book value and EPS may actually increase. Given the insider buying in the company, it appears that insiders expect that to happen (or BXMT would not have purchased the additional assets and sold the new shares). I expect that to happen; initiated a position today.

    Sentiment: Buy

  • Reply to

    Mirion Sold @ $320 million

    by sandy.criscione Mar 26, 2015 7:01 AM
    holding38 holding38 Mar 26, 2015 4:43 PM Flag

    NMB,

    I'm not sure about this, but if I recall correctly, when ACEIII was set up, the outside investors who put in the needed cash did not want it included at the outset but did want a purchase option included. If I am correct, including that option was necessary to seal the deal on ACEIII.

    Sentiment: Buy

  • Reply to

    Blackrock 8.4% Filing

    by sandy.criscione Jan 23, 2015 3:59 PM
    holding38 holding38 Jan 23, 2015 6:14 PM Flag

    Blackrock has many exchange-traded and index funds. When people buy these funds, Blackrock buys the underlying stocks and is listed as the owner. This does not indicate an active decision on the part of Blackrock to accumulate ACAS.

    Sentiment: Buy

  • Reply to

    ZZZZZZZZZZZZzzzzzzz

    by blankwillie Jan 13, 2015 12:00 PM
    holding38 holding38 Jan 13, 2015 2:03 PM Flag

    Blankwillie, I have learned so much from your keen analyses--and from this one too--but I think some of the issues you raise do require a response. First, as you say, we have prospects of rising rates, but objectively, interest rates are still in a declining trend. Agreed that at some point rates will rise, but that may not take place for some time; it doesn't make sense for 10-year bond yields in the US to be far higher than those in Japan and Germany. Second, higher rates should help AGNC and MTGE if there is a healthy differential between short and long-term rates. The problem is in getting there since the value of existing mortgages held will decline as rates rise. That problem can be alleviated to some extent by hedging, but hedging is expensive, holding down profit gains in the short and medium term. Over time, as rates "normalize," hedging costs will decline and both AGNC and MTGE should benefit. Third, having a major focus on fixed income (probably a comparative advantage for ACAS) should not be a problem if new products/funds are rolled out and existing ones attract more funds. The problem remains, however, that the market is not giving ACAS credit for what it is doing and its favorable prospects. At some point, that is likely to change, but that point may not come until some time well after the split occurs.

    Sentiment: Strong Buy

  • holding38 holding38 Dec 22, 2014 2:22 PM Flag

    Merry Christmas and Happy Holidays to you too NMB. All of us on this board are deeply indebted to you for your superb analyses and willingness to share in detail and at length. It is you above all who have made this board something unique--to the best of my knowledge--among message boards.

    holding38

    Sentiment: Strong Buy

  • Reply to

    Step back and consider some facts............

    by rondhale Dec 3, 2014 3:29 PM
    holding38 holding38 Dec 3, 2014 5:46 PM Flag

    For SDRL investors looking a few years out, a further decline in the oil price is a net positive, even if it leads to a lower near-term price. The reasons are as follows:
    (1) The oil supply will diminish as high-cost private producers drop out (including some frackers) and/or suspend new investments.
    (2) Many oil companies will find financing more expensive and more difficult to obtain.
    (3) A growing number of older rigs will be scrapped, favoring those like SDRL with the newest ones.
    (4) Lower oil prices will support more rapid global economic growth and thus an increase in the demand for oil.
    (5) Putin will face growing domestic pressures to pull back his aggressive foreign policy as the coming recession in Russia deepens. This could lead to an accommodation with the West that would restore the cooperation between Rosneft and SDRL/NADL.
    (6) Some of those countries within OPEC that are cheating by producing more than their allotment may be chastened, making it easier to get Saudi Arabia to go along with future cuts.

    Net-net, the deeper the near-term drop in the oil price, the sooner the current supply-demand imbalance is rectified and the sector recovers with the oil price. I recently added to both SDRL and NADL.

    Sentiment: Buy

  • Reply to

    Where are the endorsements for ACAS

    by lenyw Nov 28, 2014 2:39 PM
    holding38 holding38 Nov 30, 2014 2:35 PM Flag

    I know that Morgan Stanley does not cover ACAS and Citigroup was not covering it. With one or two exceptions, it is covered by small brokers only. I agree with hcg's comments.

    Sentiment: Strong Buy

  • Reply to

    Capitulation in ACAS likely next week

    by pacman010987 Nov 14, 2014 2:40 PM
    holding38 holding38 Nov 15, 2014 12:54 AM Flag

    ACAM trading at 50 cents on the dollar is unrealistic. One can expect fairly decent growth as the company rolls out new funds and profits will still be sheltered for a while by retained tax losses. Management's discussion of cost savings shows it takes raising EPS seriously. It seems to me that management is also likely to resume stock buybacks if the discount from net asset value is too great. I would hope that management will also see the value in a nominal dividend. At the same time, I agree with other posters on the board that it's likely to take some time for the full value of ACAM to be realized. That is the opportunity for both growth and value investors who are patient.

    Sentiment: Strong Buy

  • I hold some May 2015 15 options. On checking today, I found that there were 10,000 May 15s traded at $1.30 and and 20,000 May 18s traded at $0.25. I assume that the 18s were sold to bring down the cost of the 15s to 80 cents each. That would result in a 25% gain (neglecting commissions) if the stock price goes to 16 at the options expiration date, 100% at $16.60, 150% at 17 and 275% at 18. Of course the gains would diminish and eventually turn into losses at prices over 18 (or below $15.80). My guess is that the weak stock performance since the restructuring announcement (thoroughly unjustified in my view) gave the options trader confidence that the price would not run away on the upside.

    Sentiment: Strong Buy

  • Reply to

    NMB thoughts

    by foxhsmart Nov 3, 2014 5:04 PM
    holding38 holding38 Nov 4, 2014 6:26 PM Flag

    Right now, it seems the best we could hope for is something in the earnings announcement like "We have submitted our restructuring proposal to the board of directors and expect to hear back from them by the end of next week, to complete our internal restructuring by the end of the year and to seek shareholder approval early next year." Given past performance, however, we are more likely to hear "We expect to submit our restructuring proposal to the board sometime next year and to receive their response no later than 2016, with regulatory approval anticipated by 2018."

    Sentiment: Strong Buy

  • The share price was down today, but some people are bullish. Two weeks ago, forced by the sluggish pace of restructuring, I rolled my January 15 options into May 15 options. As of Friday's close, open interest was 527 options. Today, 3,177 options were purchased; the closing price was $1.34, up 8 cents. At the closing price, that represents an investment of $425,718.

    Sentiment: Strong Buy

  • Reply to

    FSAM Priced at 17

    by youcanpickum Oct 29, 2014 8:06 PM
    holding38 holding38 Oct 30, 2014 6:02 PM Flag

    I am not familiar with FSAM but the figures presented in this discussion do not appear comparable to the proposed reorganization of ACAS. ACAS will be divided into 2 or more parts. One part, the asset manager, will be a high-growth money manager paying a low dividend; the other part will be something like a traditional BDC with leveraged mezzanine loans paying a relatively attractive dividend. The first part will be attractive to those seeking growth, the second to those seeking income.

    To my mind, this is eminently reasonable. My only complaint to this point is with the horrifically long time it is taking ACAS management to present its plan. This has imposed unnecessary costs on many of us (I just had to roll over my Jan 2015 options to May 2015, and my current shareholdings in ACAS have not helped the value of my portfolio).

    Sentiment: Strong Buy

  • holding38 holding38 Sep 24, 2014 2:32 PM Flag

    Seadrill does not sell "units." You are talking about Seadrill Partners, SDLP, a limited partnership which buys drillships from SDRL that have long-term contracts. Since SDLP passes its profits through to shareholders, it does not pay taxes at the corporate level and its dividends are considered more secure than those of SDRL. SDLP periodically issues more units to give it the cash needed to buy additional units from SDRL. This is an important form of financing for Seadrill.

    Sentiment: Strong Buy

  • Amidst all the stormy market action, a measure of calm might be restored by considering GE's outlook for the underseas oil exploration sector. The following passage came from a Seeking Alpha story on GE:

    "GE Oil Segment to Drive Future Growth

    According to the second-quarter results, the hottest element in terms of revenue growth and profit is GE's Oil and Gas segment. Revenue for the quarter from this segment was roughly $4.76 billion, and accounted for about 18% of the total industrial revenues of the company. Revenues for the segment grew by 20% year-over-year in the second quarter and the profit from the segment recorded year-over-year growth of 25%. The Oil and Gas segment is smaller than the Power & Water segments of the company in terms of revenues; however, the growth in the Oil and Gas business has been remarkable. During 2013, this segment generated $17 billion, which was 13.7% higher than 2012 and accounted for 11.5% of the total revenue of the company.

    Lorenzo Simonelli, President and CEO of the Oil and Gas segment, expects the oil demand to grow 1.5% higher next year while gas demand should grow by 3.5%. This demand will in turn encourage oil and gas exploration companies to expand their operations. Since GE's business is to provide the equipment needed for digging and other exploration processes, the demand for its products will increase substantially over the next few years.

    GE expects that the overall exploration industry will have a capital expenditure of $1.37 trillion by 2017, with an annual growth of 6%. Under this industry, sub-sea producers' spending will grow by 9% each year from 2014 till 2017. Offshore drilling segment has been growing rapidly, as oil and gas companies are moving towards the offshore reserves."

    Over the last two days, I moved from my Jan. '16 35 calls to Jan. '17 30s; it may take a while for normality to be restored, but it will happen.

    Good luck to all longs.

    Sentiment: Buy

  • Normally don't like to go so short term, but this looks compelling. Everything that has transpired over 2014 is consistent with the bullish restructuring plan. Admittedly, the company is quiet, but having been burned before by its confident pronouncements before the financial crisis, I'm sure that management wants to prevent any more lawyer enrichment at the expense of ACAS. When the announcement comes within the next few months that ACAS is restructuring into about three dividend-paying firms, the share price boost should be material.

    Sentiment: Strong Buy

  • Reply to

    Back of envelope NOI projection for ACAS

    by donedealer Aug 9, 2014 9:10 PM
    holding38 holding38 Aug 10, 2014 6:17 PM Flag

    Done,

    You may be right--but then again you may not be. the problem with your calculation is that you are projecting into the future a capital structure and set of activities that are unlikely to be continued in their present form. The investment in floating rate debt, for example, is a temporary expedient to generate income flow from what otherwise would be cash held to facilitate the restructuring.

    In the future, I would expect ACAM to be a fairly high growth asset manager and to be valued as such. This will happen as new funds are added and existing ones expand in size. Take MTGE, for example, which I began investing into a little over a year ago and have continued to add to. The fears of sharply rising interest rates hit the company sharply and it was forced to restructure its holdings and increase its hedges to protect NAV; this is costly and reduced earnings, forcing cuts in dividends. The strategy has proven quite successful and dividends have leveled off; I believe that within about 6 months they will start increasing again (not bad for a stock yielding close to 13%). MTGE is still selling well below NAV, so additional stock cannot be sold to increase ACAM/ACAS earning assets. In the future, however, the stock is quite likely to sell above NAV and open the door to the sale of additional equity on a significant scale. The opportunity here can be seen by comparing the market cap of MTGE to that of AGNC. I also expect substantial expansion of the energy & infrastructure fund and the new funds now being rolled out.

    I expect the income-oriented business development company fund to focus on high-yield loans rather than equity or floating rate loans, thus increasing the potential for rising dividends. For these reasons, I don't think it is appropriate to project into the future a valuation based on the activities of the recent past.

    Sentiment: Buy

  • 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.

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