As mentioned this morning, we added back to our Blackstone Group (BX) exposure as the stock jumped back over a key moving average on the back of a solid earnings report.  After 7 sessions of purgatory, the stock is in a better position today.

Unlike a widget maker type of company I will give analysts a lot more leeway for a firm such as this with so many moving parts... however, the difference in revenue between what analysts estimated ($450m) and actual ($603m) is astonishing.  As long as markets hold up, it should allow Blackstone to continue to unload its prospects onto a world full of newly minted US dollars and nowhere to put them. [Oct 12, 2009: Blackstone Group Surges on Potential Listing of 8 Portfolio Companies, and Selling of 5 Others]   Full (and lengthy) report here.

Some color on earnings:

  •  Private equity firm Blackstone Group LP (NYSE:BX - News) posted a forecast-beating quarterly profit and said it is gearing up for more deals and IPOs as the lending and equity markets recover.  
  • Blackstone's third-quarter earnings before income taxes, noncash charges for vesting equity-based compensation, and amortization of intangible assets -- a measure it calls economic net income (ENI) -- were $278.4 million, compared with a loss of $509.3 million a year earlier.
  • On an after-tax basis, ENI was 25 cents a share. Analysts expected, on average, 15 cents a share, according to Thomson Reuters I/B/E/S/.
  • Revenue fell to $603.8 million in the latest quarter from $833 million a year earlier, although it did rise on a sequential basis from the second-quarter total of $403.6 million.
  • The value of Blackstone's private equity portfolio rose by 5 percent in the third quarter, although the value of its real estate portfolio fell by 0.4 percent.
  • The company said it would pay its regular quarterly distribution of 30 cents a share to unitholders.
  • The company, which has immense real estate and private equity assets, has stepped up deal activity in the past few months, including buying Anheuser-Busch InBev's  U.S. theme parks for up to $2.7 billion. It is also considering initial public offerings for a number of its companies.
  • We see great opportunities to buy assets from motivated sellers, Blackstone Chief Operating Officer Tony James said on a conference call.  He said Blackstone has $27 billion of dry powder -- capital available for investment.
  • Blackstone Chief Executive Stephen Schwarzman said in a press release that the worst is over, although a recovery in the economy could be gradual and uneven.

For the sake of being complete, let me add this item - although in the stock market we live in a world of make believe (GAAP accounting does not count)

  • On a GAAP (generally accepted accounting principles) basis, Blackstone lost $176.2 million in the latest quarter, compared to $340.3 million a year ago. The latest GAAP results include $201 million in IPO- and acquisition-related charges, the company said, as well as other items. 

Some analyst commentary:

  • JMP Securities reiterated its market perform rating on Blackstone shares following the report, calling the performance a good, solid beat with most of the upside coming from the company's real estate private equity and credit and marketable alternatives business.
  • The firm also noted advisory revenues, though down on a year-over-year basis, did well in the latest quarter, coming in at $97.3 million, well ahead of JMP's estimate of $80.5 million, and higher on a sequential basis. Blackstone's restructuring and reorganization advisory unit has done well with so many companies paring down in the past year.

[Oct 7, 2009: Sea World, Busch Gardens Now in Hands of Blackstone Group]

[Sep 10, 2009: Blackstone Group Rallies on Goldman Sachs Addition to Conviction Buy List]

[Aug 27, 2009: Blackstone Group Becomes Top Fund of Fund Player]

[Aug 6, 2009: Blackstone Group Beats, But Already Ran into Earnings]

[May 7, 2009: Blackstone Group Narrows Loss]

[Mar 31, 2009: Bookkeeping - Starting Blackstone Group]

 Long Blackstone Group in fund; no personal position