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Blackstone Posts Strong Growth on Real Estate and Hedge Funds in 3Q

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Blackstone beats EPS estimates

The Blackstone Group (BX) reported its third quarter earnings on October 27. The company beat Wall Street analysts’ economic net income estimates of $0.48 with posted economic net income of $0.57. Blackstone is the world’s biggest alternative asset manager. The company’s stock fell 0.2% on its earnings announcement. The company saw improved performance on hedge fund solutions and real estate. Blackstone is reaping valuations on investments made over the past few months.

Estimates

Blackstone reported an economic net income of $687 million in the third quarter, mainly due to higher performance and investment income on a year-over-year basis. The company’s assets under management rose 8% on a year-over-year basis to $361 billion. The company invested $4.3 billion in new opportunities.

In its press release of October 27, 2016, Blackstone’s chair and CEO, Stephen Schwarzman, stated, “Blackstone continued to perform well in this year’s third quarter, with every business achieving sequential and year-over-year growth in both revenues and earnings, and assets under management reaching a record $361 billion. In a period of very low growth and interest rates around the world, we strive to provide good investment returns to institutions and individuals alike. And we achieved that goal.”

Alternative investment giant

Blackstone provides alternative asset management services including investment vehicles focused on private equity, hedge fund solutions, real estate, non-investment-grade credit, funds of funds, and multi-asset class exposures outside other funds’ mandates. It faces competition from traditional asset managers and alternative asset managers that form part of the SPDR S&P 500 Index (SPY).

The company’s revenue fell 40% in the last financial year. The revenue growth for Blackstone’s competitors the Carlyle Group (CG), KKR (KKR), and Apollo Global Management (APO) fell 7.2%, 18.3%, and 59.6%, respectively.

In this series, we’ll study Blackstone’s private-market performance, credit, public markets, dividends, and valuations. Let’s begin with its private equity portfolio performance in 3Q16.

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