Dear Mr. Berko: I have $14,000 to invest from a January sale of 300 shares of Yahoo at $49, which my broker told me to sell at $50. I need income, as well as growth, and my broker recommended that I buy 300 shares of The Blackstone Group. I’d like to know what you think.
— GA, Rochester, Minn.
Dear GA: I think you have a very wise stockbroker.
Harry Blackstone’s initial public offering was in 1885. Known as “The Great Blackstone” — a rival to Harry Houdini — and one of America’s greatest illusionists, he permanently exited the stage in 1965. Enter The Blackstone Group in 1985. In 2007, Blackstone completed its IPO at $31, managed by five of Wall Street’s biggest names. Though there is no relation between The Great Blackstone and The Blackstone Group (BX-$41.02), there is a similarity in their magic, though BX’s isn’t illusionary.
Blackstone is the world’s largest global alternative asset manager, with $300 billion under management. BX paid a $3.12 distribution last year. According to Value Line, Deutsche Bank and Barclays, BX expects to earn $4 this year and could increase its distribution to $3.76. This provides current shareholders a potential 9 percent dividend return. The BX folks manage corporate private equity funds, real estate opportunity funds, funds of hedge funds, magazine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds. BX’s financial services folks are sought for their advice on numerous corporate mergers and acquisitions, and BX’s folks are keenly involved in corporate restructuring and reorganizations. Meanwhile, two of BX’s most prolific divisions, private equity and real estate, have been distributing record profits to shareholders. Last year, BX sold its United Biscuits acquisition for $2.8 billion and reduced its interests in Hilton Worldwide and La Quinta Holdings for a multibillion-dollar gain.
Various expected secondary sales this year, plus expected sales in 2016, should handsomely benefit earnings and shareholder distributions during the next two years. BX also has been committing billions of dollars to sectors of the European economy, the oil sector and Asian real estate markets.