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2022-01-27 16:48

Shares of Blackstone Inc are up about 8.0% on Thursday after the world’s largest alternative asset management company said its profit nearly doubled in fiscal Q4 and AUM hit a quarterly record.
Q4 financial performance

Blackstone reported $1.4 billion in net income that translates to $1.93 per share. In the same quarter last year, its net income was capped at $748.9 million or $1.07 per share. On CNBC’s “Squawk Box”, COO Jon Gray said:

“It was the best quarter in our history driven by strong results for our customers. Best appreciation in our history across a bunch of verticals. And then, we’re also broadening our platform. We’re serving retail and insurance and still our institutional clients. Retail insurance is now 40% of our AUM and that’s leading to record financial results.”

At $880.9 billion, the U.S. firm noted a 42% YoY growth in assets under management versus $818.6 billion expected. This marked the fastest growth for Blackstone in more than ten years. Inflows came in at $154.8 billion, including Everlake and AIG Life 7 Retirement acquisitions it completed in November.

The strong performance was attributed to fundraising. Blackstone’s BPP, BREIT, and BCRED raised $16.7 billion combined in the recent quarter. Distributed earnings printed at $2.27 billion or $1.71 per share – a significant increase from $1.46 billion last year or $1.13 per share. According to FactSet, experts had forecast $1.8 billion in distributed earnings.

Where Blackstone is investing amidst inflation

Amidst persistently higher levels of inflation, COO Gary said, there still are exciting opportunities to buy. He noted:

“You want to invest in floating rate debt shorter duration that goes up as rates go up. You want to own hard assets like transportation infrastructure or real estate short duration rental housing or logistics. In the corporate world, areas where there’s strong secular growth trends like green energy, life sciences, recovery in travel and housing because as rates move up, it puts pressure on multiples. So, own assets where cash flow will grow. That’s where we are focused.”

In the next 18 months, Blackstone said on the earnings call, it is aiming to raise roughly $150 billion combined via 17 funds; a 25% growth on top of its prior cycle. The New York-based giant had $135.8 billion in dry power as of the end of the fourth quarter.

Gary’s take on the stock price

Blackstone, however, is still down about 5.0% year-to-date in the stock market. According to COO Gray:

“The way I look at it is that the market's just nervous generally. It’s nervous about asset prices, interest rates, inflation. We’re focusing on executing. We’ve got a ton of momentum, we feel really good particularly how we position our portfolio, we think the stock will take care of itself as we continue to deliver.”

BX closed 2021 with a 100% gain.