The Blackstone Group L.P. (BX)

ButtSauce (98.65) Submitted: 6/26/07 4:35 PM

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Thank you for posting that.

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jester112358 (99.80) Submitted: 7/18/07 7:07 PM

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You are so right!, But its a nice safe short for this reason. I hate these private equity greed-heads.

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radicalredwafer (< 20) Submitted: 9/08/07 8:08 AM

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Blackstone performs one of the most simple and basic economic functions known in a capitalistic system. It has the vision to see hidden value in a particular company, then acquires such targeted corporations, improves their management structure, operations and other key areas of performance (i.e, "adds value" ) then sells the improved corporation for its perceived higher value to willing buyers who are usually able to observe the stock price increase. We may not like speculators or arbitrageurs, or placing risky commodity bets, but they all play an important part in allocating risk in these various stock invenstment plays. Don't fight the ticker tape. Simply observe Blackstone's past performance record. My sense of it is Blackstone is a definite buy (within the next 60 days or so) and hold for 18--24 months. Then it will outperform the market and various benchmarks by a wide margin on the strength of its management team alone. Higher risk yields higher returns. I'm all in.

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spiels (72.56) Submitted: 9/11/07 3:28 AM

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Excellent take on BX ! I feel someone got the shaft.. There stock is still going south

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GunnarVagotis (96.12) Submitted: 9/11/07 8:05 PM

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Did you shake your pom-poms and shout that through your megaphone as you wrote it? My problem with Blackstone is not the economic function that they suppose to provide. In fact, we agree that the management team is shrewd. Shrewd enough to go public before all the risk derivatives and other shennanigans threaten to explode. Shrewd enough to not be the ones holding the bag when it happens.

I'm sorry that you're having to go around trying to do damage control on BX if you've been long on it but they are by no means out of the woods yet. Higher risk *can* yield higher returns but the returns have been squeezed out of this lemon and all that's left now is the risk.

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Somnambulo (96.29) Submitted: 9/11/07 11:04 PM

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They have allocated risk alright. They allocated it away from the people who founded it and gave it to the retirement accounts everywhere. Anybody check on the other private equity that was supposed to public right after them?

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StavrosW (< 20) Submitted: 9/18/07 3:43 PM

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There is more than one problem with your post, but I'll keep it short.

i. Could you whine any louder? Any private company has the right to go public and sell shares. Everything is in the prospectus, and any nitwit can do the diligence on their own to determine whether or not the investment makes sense. Shwartzman & Co. cashed out (theoretically, as their value is only implied in the shares they own, until they sell), and who are you to tell them they can't. These guys build a company that has performed phenominally as a private investment firm for years, and you are going to chastize them for reaping the benefits of their hard work? If you're a buyer, and you got burned, that's your problem; You weren't wise enough to realize it was a bad time for a financial play, especially one that is so heavily correlated to the credit markets. The last time I checked, the prospectus and all other necessary info was available to all the mutual funds and small time brokers, and I am doubtful anyone forced them to buy BX, so I'd like you to elaborate on why their IPO should be illegal. I guess free enterprise means nothing to you...

ii.

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GunnarVagotis (96.12) Submitted: 9/18/07 7:08 PM

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Thank you for keeping it short and limiting your reply to boiler plate free market speak. I feel real bad for dissing Schwartzman. Saying BX's IPO "should be illegal" was perhaps hyperbole but with any luck at least 1 person read it and decided not to buy. I think my pitch is a bit easier to digest than the Kool Aid Manifesto you refer to as the "prospectus", and at least 15 people agree in principle with it. But, I guess I must not be a compassionate conservative because I say "selling a ticking time bomb to the public" and you say "reaping the benefits of their hard work". Spare the rod and spoil the billionaires, right? It sounds so wholesome your way. Really, though, the reaping part happened all throughout the private years via sweet management fees and extremely favorable tax loopholes. The part after going public qualifies as "reaping the benefits of an investing public who did not see the credit crunch coming." FWIW, I did not touch the Blackstone IPO.

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StavrosW (< 20) Submitted: 9/19/07 12:24 PM

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Unless there is a law that says private companies cannot go public if potentially adverse economic conditions exist, I'm still convinced that the higher-ups at Blackstone are fully entitled to everything they've gotten as a result of the IPO. The prospectus lays out everything you need to know about a company prior to it going public. If you can't understand it, don't invest in it. If you don't understand it, and you do invest in it, it's your problem. Your pitch is easier because it applies to the masses who can't, or don't, understand simple valuation or economic principles. I also think my pitch is a little more substantial than "Don't buy BX, because these rich guys are making even more money because they wen't public, and putting the risk in the hands of the shareholders"...which by the way is a fundamental difference between public equity and other investments.

If your gripe is that investors got burned because of seemingly unforseen market conditions, then you're wasting your time. That's what happens. People make money and lose money based on seen and unforseen market movements. The people that have lost money on Blackstone are no different than all of those who lost money in the tech bubble, and every other bubble before and after that. I think that unless you can convince the SEC to change their requirements of who can and can't go public, you're wasting your breath.

Personally, I'm long BX, because I understand (unlike you) that they're not solely in the business in real estate. They're a global value machine that will find arbitrage anywhere whether real estate, telecom, utilities, etc. They've been around for quite some time, and have continued to make impressive returns for quite some time through good times and bad. Global growth and opportunity is what drives this stock, long term, and I am therefore bullish. It's depressed right now because of the current credit envrionment, and the overall pessimism about financials, but that will eventually change, and BX will rally. Corporate HY (what BX uses when they buy other companies and take them private) is far different than sub-prime mortgages, and I think people will realize that. BX's real estate hodling may suffer short term, but I'm not a speculator. Additionally, the current price is a GREAT opportunnity to get in.

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Somnambulo (96.29) Submitted: 11/12/07 10:55 PM

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You're long on BX? I hope your really, really really, long. because the assets the owners wiped their hands of and threw into the arms of mutual funds everywhere smell like rotten onions baking in the sun. The reason some, including myself, think they abused the system is the premise behind going IPO. A company goes IPO so that they can take the money from the offering and use it to buy things, build infrastructure and invest in ways that that strengthen the company to grow. Are you telling me Blackstone needed cash? They absolutely did not - they made unbelievable profits in the previous decade, and were swimming in cash. So the real reason they went public was to trade in their stock for cash before enough investors noticed the whole thing was falling apart. And you can poo-poo joe investor for buying in, but the truth is that large investment firms bought up quite a bit, and what can joe blow do if the mutual funds in his 401k snap it up? Nothing. The media in the U.S. is truly wretched, as there were very few analysts that are willing to call it like it is.

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hondo928 (99.79) Submitted: 11/27/07 1:34 PM

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A lot of people here seem to thing that the management just wants to make it rich and run, but they have a lot of personal funds rapped up in BX stock they cannot sell for a few years, I think I was told 2010 was the first time they are allowed to sell, by one of them. They have to dump the shares on the open market too so a drop in stock price isn't helping them by any means. The IPO was over hyped and that led to the disastrous fall but I think that the time in purgatory for this stock has been enough.

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GunnarVagotis (96.12) Submitted: 11/27/07 2:06 PM

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It seems pretty simple to me. Management has a company valued at X dollars. They know that the value of the company is based partly on bad debt and that soon the company will be worth a lot less than X (let's say the amount of bad debt is K). So they sell some percent p of the company to the public and at the moment of the IPO they now hold p*X worth of the company and (1-p)X in cash. Soon after, the real valuation of the company is discovered to be (X-K). The original ownership's loss is p*K and the public shoulders the other (1-p)K.

The claim is simple: Blackstone management knew the company was headed for a significant correction in valuation, and they went public so that the public could shoulder a potion of that loss. The stock is trading well below the IPO value, so this is currently a win for those who sold shares in the company at the initial public offering.

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