Omega88
2022-09-13

Alternative asset management with almost unlimited funding!!! Potential US growth stock with 5+% dividend yield, sounds too good to be true??

$Blackstone Group LP(BX)$focuses on alternative investment and currently had US$940.8 billion AUM. They have 4 core pillars; real estate (US$320 billion), private equity (US$275.9 billion), credit and insurance (US$264.8 billion), hedge fund solutions (US$80.1 billion).

▪Total AUM increased to $940.8 billion, up 38% year-over-year, with $88.3 billion of inflows in the quarter and $339.7 billion over the LTM. (*LTM = last Twelve Months)

▪Fee-Earning AUM of $683.8 billion was up 37% year-over-year, with $44.4 billion of inflows in the quarter and $262.4 billion over the LTM.

▪Perpetual Capital AUM reached $355.9 billion, up 110% year-over-year.–Fee-Earning Perpetual Capital AUM reached $306.3 billion, representing 45% of Fee-Earning AUM.

It currently has a dividend yield of 5+% and it is currently down ~20% year to date. The unique point about Blackstone is that vast majority of their AUM today is under long-term contracts or even perpetual structures, helping them to avoid the large decreases in AUM experienced by many other money managers - which we have observed in current environment. Their model also provides them the advantage of patience to buy assets, and the flexibility to sell when the time is right.

For the past 12 months, inflows reached $340 billion. Driving a 38% increase in AUM, to reach a record high of US$941 billion. They were about midway through the largest fundraising cycle in their history with enormous support from limited partners, providing them with an unprecedented US$170 billion of dry powdered capital. Blackstone's unique fundraising cycle and deployment of dry powder should significantly expand the firm's earnings power and fee-related earnings over time.

The key question is how can Blackstone generate these extraordinary results while most other money managers are suffering? It is the power of their brand and superior performance over the years, which have enabled them to build unique relationships with their clients over decades. Blackstone has also benefited from the remarkable trend started over 30 years ago of increasing allocations to alternative managers as investors seek higher, sustainable returns, including retail investors, which represent a vast and largely untapped market.

Recently, they have been on a huge buying spree acquiring different businesses such as $American Campus Communities(ACC)$ (US$12.8B - student housing), $PS Business Parks(PSB)$ (US$7.6B - commercial properties) , Crown Resorts (A$8.9B), Core Trust etc. The amount of available dry powdered capital is immense!!!

Despite the current bearish sentiment, the stock is up 212% over a period of 5 years! Their AUM is growing so rapidly even in a bear market, imagine what will happen in a bull market?? I see the current sell-down as good opportunity to buy at a discount! I'm adding more for its high growth potential and high dividend yield (5+%). Do let me know your opinion!

@Daily_Discussion@CaptainTiger@TigerStars@MillionaireTiger

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