The Blackstone Group L.P. (NYSE:BX) held its investor meeting this week, and analysts are generally positive on the firm even though management did not provide updated financial guidance. Analysts at BMO Capital and RBC Capital both made positive remarks about Blackstone management in their reports this week.
Praise for Blackstone Management
In a report dated June 12, 2014, RBC Capital analyst Bulent Ozcan reiterated the firm’s $39 per share price target and Outperform rating. The analyst said that once again, it seemed like The Blackstone Group L.P. (NYSE:BX) management left investors with “information overload.”
However he said there was one big theme that was presented in all of the presentations, and that was the firm has set itself apart from other asset managers through its corporate culture.
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Blackstone’s unique corporate culture
Ozcan said it looks like The Blackstone Group L.P. (NYSE:BX) has “created something differentiated, if not unique.” He said the culture created a demand for collaboration, noting that it seemed like information and knowledge sharing was a big part of the way Blackstone operates.
He noted that all decisions about investments are made after considering every senior manager’s point of view and perspective. The analyst also said that every member of the investment team is responsible for the firm’s performance and that they all have to think the way investors think. He also noted that The Blackstone Group L.P. (NYSE:BX) has a very “flat organizational structure with only three degrees of separation.”
Blackstone has plenty of opportunities
In a report dated June 13, 2014, BMO Capital analysts David Chiaverini and Richard Fellinger said The Blackstone Group L.P. (NYSE:BX) has competitive advantages in its scale and “product breadth,” especially since limited partners continue reducing the number of investment managers they do business with. They analysts also see significant retail opportunity for Blackstone because average allocations to retail are between 2% and 3%, compared to more than 20% for institutions.
They note that The Blackstone Group L.P. (NYSE:BX) has raised $9 billion from retail over the last 12 months and that this makes up 10% of the firm’s total assets under management. The analysts also say Blackstone has seen opportunities in European direct lending, corporate debt in emerging markets, and energy financing in spite of a frothy credit market.
In addition, they say The Blackstone Group L.P. (NYSE:BX)’s hedge fund solutions business is still “evolving and increasing its direct investments in general partner interests of hedge fund managers.” They think this hedge fund initiative will increase direct investing revenue to 44% of the firm’s total hedge fund solutions revenue by 2016. That’s compared to just 17% of that segments revenue last year.