Are you familiar with the term “alternative asset manager” and the company Blackstone Group (NYSE:BX)? An alternative asset manager invests in things that average investors typically don’t have access to. Some examples include private equity or venture capital, hedge funds, distressed debt, commodities, and real estate. Since they are complex investments that are not regulated by the SEC and can be illiquid, alternative investments are usually held by institutional investors or high-net-worth individuals. That’s part of the reason why buying shares of a company like Blackstone is so intriguing.
It's an investment firm with an alternative asset management business that includes real estate, private equity, public debt and equity, growth equity, non-investment grade credit, real assets, and secondary funds. That means retail investors can gain exposure to alternative investments through one of the global leaders in the sector by purchasing Blackstone Group shares. The company just posted record profits in Q1 and is a strong buy for several reasons. Let’s take a deeper look at what makes Blackstone Group so special below.
Global Leader in Alternative Asset Management
When it comes to finding the best companies to invest in for the long-term, it usually pays to find out which ones are the global leaders in their respective industries. Blackstone Group is compelling because it’s one of the best companies in the alternative assets industry, an area of financial services that can be incredibly lucrative. The company operates in four different segments, private equity, real estate, hedge fund solutions, and credit & insurance. That means investors will gain exposure to things like massive real estate funds with geographic diversification and private equity funds with jaw-dropping amounts of assets under management.
The company generates revenue from management and advisory fees, performance fees, investment income, interest, and dividend revenue and has a highly scalable business model, which is a great quality to look for in an investment. It’s also worth noting that Blackstone stands out thanks to its status and prestige. With a long track record of generating attractive returns for its customers across all different asset classes in various economic conditions, the company’s reputation as a global leader makes this a stock you can feel comfortable investing in for the long term.
Record-Breaking Q1 2021
Another strong reason to consider buying shares of Blackstone Group at this time is the fact that the company just posted a quarter for the record books. At the end of Q1, Blackstone Group reported Total Assets Under Management of $648.8 billion, up 21% year-over-year. This is big news because at this point the company has the most AUM in its history. More importantly, the company’s fee-earning AUM of $481.2 billion was up 14% year-over-year which bodes well for continued earnings growth. It’s worth noting that Blackstone is targeting an ambitious $1 trillion of assets under management within eight years, and it appears that the company is well on track to attain this milestone.
The company beat analyst estimates with Q1 EPS of $0.96 versus the $0.76 EPS consensus estimate and reported revenues of $5.29 billion, up 79% year-over-year. It’s also worth noting that Blackstone has $148.2 billion in total dry powder to use for future investments, which puts it in a great position to take advantage of the re-opening of the global economy. Blackstone has already acquired a major holiday park operator in Britain, a Japanese hotel portfolio, and a private aviation business ahead of the travel industry’s eventual recovery. It’s safe to say that Blackstone will continue to scoop up undervalued assets to take advantage of a rapidly changing global economy in the wake of the pandemic, which is another reason why the stock could be a big winner for the rest of the year.
Sophisticated Investing for the Little Guys
The bottom line here is that Blackstone Group stock offers retail investors a unique opportunity to gain exposure to investment vehicles that they normally would never have access to. The idea that some of the most sophisticated asset managers in the world are working hard to deliver outsized returns for your portfolio is simply too good to pass up. Just look at Blackstone’s private equity portfolio performance in Q1, which appreciated by 15.3% compared to a 5.8% increase in the benchmark S&P 500 stock index during the same period. Expect Blackstone to continue thriving in the current market environment and delivering strong results for the remainder of the year and beyond.
The stock also offers a 2.81% dividend yield and the company returned $1.0 billion to shareholders in Q1 2021. This is a company that is committed to rewarding long-term investors in multiple ways, which is another great reason to add shares for the long term. If you are interested in exposure to alternative assets and a global leader in capital markets, look no further than Blackstone Group stock.