BLK - Blackrock

[Spekulatius]

I am surprised there isn’t a thread already, but I could not find one. I recently got aware of this stock, after having it on my watchlist for a couple of years. BLK apparently sold of too about 13.5x earnings and 10x EV/EBITDA, which is and approximately 20% discount to its average valuation. BLK l

Has traded at a similar valuation during the small time in 2016,2015 (spikes down during selloffs) and even cheaper during 2011-2013. Looks like a mediocre earnings report and some fund outflows are theroot cause of the last downleg.

 

I like BLK as an asset manager, because I’d their great reputation and their focus on passive investing/ETF. The business itself is a great one with strong profit margins (40%) and very cash generative , as it needs little capital to run. they are #1 in their respective business, but keep in mind that the stock is certainly correlated with the equity markets and the beta is high. I bought an approx 1% position today and wouldn’t mind averaging down. It’s one of the more attractive high quality stocks right now, IMO.

[Gregmal]

I agree. This and BX have been on my radar for a long time. I own BX but find the two businesses to be quite attractive and definitely high quality. The main thing for me, just generally speaking, is that BLK is more passive index, management of funds, fee business. Which is great. But that is more susceptible to this "race to the bottom" trend. Oddly enough, BX, despite catering more to smart money than BLK, seems to have real pricing power and gets away with charging whatever they want.

[Spekulatius]

BX is more like a high yield version of BAM. The earnings can be quite volatile, because they depend on the returns. I would be somewhat concerned about higher interest rates stymifying growth in private equity, real estate and the like that Bx is involved in. BLK fornthr mot Wort jut takes a fee. If AUM go down due to market declines, so will BLK fee intake, but there is no inherent leverage in play like with BAM or BX. OAK is another one to look at, with some countercyclical aspects.

[Gregmal]

You're right, and it's more just personal preference. Although not exactly investment related the backstory behind BLK and BX is quite interesting as well. Probably why one always reminds me of the other.

[Haasje]

Blackrock is not cheap enough for me. I don't like the ETF business. Competing with Vanguard and Schwab really sucks.

 

I own BX, OAK, CG. The whole private equity spectrum seems very cheap to me. I like them because 1) lock up capital 2) management fees and performance fees 3) are using their brand power to diversify into less specialized niches where its easier to gather massive aum 3) OAK is underraising 4) OAK owns 20% stake in fast growing high fee charging DoubleLine and 5) OAK may turn out to be a countercyclical

 

Invesco is also a cheap asset manager but I don't like the products and positioning. But they are really cheap.