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Blackstone (BX) Rides on Rising AUM Amid Higher Expenses
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Blackstone Inc. (BX - Free Report) remains well-poised for growth on the back of rising assets under management (AUM), a solid revenue mix and improving fee income. However, a rising expense base and a tough macroeconomic backdrop triggering fund outflows remain concerns.
Blackstone’s solid global presence enables broad diversification and organic growth prospects. While segment revenues dipped in 2023, the metric reflected a six-year (2017-2023) compound annual growth rate (CAGR) of 5.3%. The growth was primarily driven by improved management, advisory fees and total investment income. The trend continued in the first half of 2024. Given the promising performance of the company’s funds, the top line is expected to grow in the upcoming quarters.
BX’s fee-earning AUM and total AUM have consistently demonstrated robust growth, supported by rising net inflows. Fee-earning AUM and total AUM witnessed a 14.7% and 15.7% CAGR over the last six years (2017-2023), respectively. Both witnessed an uptrend during the first six months of 2024. The company’s diversified offerings, revenue mix and superior positioning in the alternative investments space will likely continue to aid AUM growth.
Amid the tough fundraising environment for asset managers, Blackstone managed to raise funds successfully. As of Jun 30, 2024, the company’s dry powder, or the available capital, was $181 billion, driven by funds raised for global private equity and real estate funds. Moreover, the company allocated roughly $58 billion of capital during the first half of 2024.
Nonetheless, the persistent rise in expenses remains a concern. Though total consolidated expenses dipped in 2022, the same reflected a 5% CAGR over the six-year period ended 2023. This rise was majorly due to higher general, administrative and other expenses. The trend continued in the first half of 2024. Expenses are likely to stay elevated in light of steady investments in franchise and rising headcount in the company’s well-performing funds.
Blackstone’s operations significantly rely on the commitment of its alternative investment funds’ investors. During the financial crisis in 2008, the company’s performance declined due to lower new commitments as investors remained reluctant to invest in market-linked investments.
While the company successfully managed to navigate through the pandemic without facing funding-related issues, any macroeconomic shift may lead to a trend reversal. Last year, the company experienced significant outflows in some of its funds, which could adversely impact its financials in the future.
Year to date, Shares of BX have gained 1.6% compared with the industry’s rise of 3.8%. BX currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for JHG has been revised upward by 5.2% for 2024 over the past 30 days. The stock price has increased 20.8% over the past six months.
Earnings estimates for HLNE have been revised 1.7% upward for the current year over the past week. In the past six months, HLNE’s shares have risen 23.2%.
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Blackstone (BX) Rides on Rising AUM Amid Higher Expenses
Blackstone Inc. (BX - Free Report) remains well-poised for growth on the back of rising assets under management (AUM), a solid revenue mix and improving fee income. However, a rising expense base and a tough macroeconomic backdrop triggering fund outflows remain concerns.
Blackstone’s solid global presence enables broad diversification and organic growth prospects. While segment revenues dipped in 2023, the metric reflected a six-year (2017-2023) compound annual growth rate (CAGR) of 5.3%. The growth was primarily driven by improved management, advisory fees and total investment income. The trend continued in the first half of 2024. Given the promising performance of the company’s funds, the top line is expected to grow in the upcoming quarters.
BX’s fee-earning AUM and total AUM have consistently demonstrated robust growth, supported by rising net inflows. Fee-earning AUM and total AUM witnessed a 14.7% and 15.7% CAGR over the last six years (2017-2023), respectively. Both witnessed an uptrend during the first six months of 2024. The company’s diversified offerings, revenue mix and superior positioning in the alternative investments space will likely continue to aid AUM growth.
Amid the tough fundraising environment for asset managers, Blackstone managed to raise funds successfully. As of Jun 30, 2024, the company’s dry powder, or the available capital, was $181 billion, driven by funds raised for global private equity and real estate funds. Moreover, the company allocated roughly $58 billion of capital during the first half of 2024.
Nonetheless, the persistent rise in expenses remains a concern. Though total consolidated expenses dipped in 2022, the same reflected a 5% CAGR over the six-year period ended 2023. This rise was majorly due to higher general, administrative and other expenses. The trend continued in the first half of 2024. Expenses are likely to stay elevated in light of steady investments in franchise and rising headcount in the company’s well-performing funds.
Blackstone’s operations significantly rely on the commitment of its alternative investment funds’ investors. During the financial crisis in 2008, the company’s performance declined due to lower new commitments as investors remained reluctant to invest in market-linked investments.
While the company successfully managed to navigate through the pandemic without facing funding-related issues, any macroeconomic shift may lead to a trend reversal. Last year, the company experienced significant outflows in some of its funds, which could adversely impact its financials in the future.
Year to date, Shares of BX have gained 1.6% compared with the industry’s rise of 3.8%. BX currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Asset Managers Worth a Look
A couple of better-ranked asset manager stocks are Janus Henderson Group plc (JHG - Free Report) and Hamilton Lane Incorporated (HLNE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for JHG has been revised upward by 5.2% for 2024 over the past 30 days. The stock price has increased 20.8% over the past six months.
Earnings estimates for HLNE have been revised 1.7% upward for the current year over the past week. In the past six months, HLNE’s shares have risen 23.2%.