Archive for December 14th, 2007
Filed under: The Blackstone Group, Financials and analyticals
The wizards of Wall Street seem only to generate losses lately. Take the premier alternative asset firm, Blackstone (NYSE: BX). On yesterday’s Q3 earnings report, the stock fell 8%. Weren’t these the folks supposed to have the Midas Touch?
Well, Blackstone’s Q3 was actually respectable in light of the severe credit crunch and financial instability. Revenues increased 14% to $526.7 million and economic net income (NEI) was $299.2 million, which is adjusted for income taxes and equity compensation.
But as Citigroup (NYSE: C), JPMorgan Chase (NYSE: JPM), and Bank America (NYSE: BAC) clean up their mortgage mess, there is likely to be a void for lending on big transactions. Unfortunately, Blackstone’s chief offering officer, Tony James, has no idea when this things will clear up but did call the situation a “black hole.” In fact, the problems seem to be spreading into Blackstone’s commercial real estate business, which saw a 44% drop in revenues to $109.1 million.
So in the meantime, Blackstone plans to focus on smaller deals, minority investments and even long positions in mortgage investments. After all, black holes can ultimately turn into good investments, right?
Keep in mind that Blackstone has been around for roughly 20 years and has seen various disruptive market cycles. The experience may payoff. According to the conference call, James indicated that the firm has focused its portfolio on defensive categories, such as on companies in healthcare, consumer products and healthcare. There has also been a focus on Asia, which should get a boost from the $3 billion investment from the Chinese government.
What’s more, when the private equity market got frothy early this year, Blackstone remained disciplined. James said that Blackstone lost the bids on 90% of potential deals.
So as a public company and billions in fresh capital, Blackstone is positioned nicely to capitalize on financial wreckage. True, it may take some time to get returns. Then again, when it comes to investing in alternative investments, the strategy is to take the long view. And as seen with the history of Blackstone, it has worked quite well.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements
Share This
Share This
 No Comments »
Filed under: The Blackstone Group, Financials and analyticals
The wizards of Wall Street seem only to generate losses lately. Take the premier alternative asset firm, Blackstone (NYSE: BX). On yesterday’s Q3 earnings report, the stock fell 8%. Weren’t these the folks supposed to have the Midas Touch?
Well, Blackstone’s Q3 was actually respectable in light of the severe credit crunch and financial instability. Revenues increased 14% to $526.7 million and economic net income (NEI) was $299.2 million, which is adjusted for income taxes and equity compensation.
But as Citigroup (NYSE: C), JPMorgan Chase (NYSE: JPM), and Bank America (NYSE: BAC) clean up their mortgage mess, there is likely to be a void for lending on massive transactions. Unfortunately, Blackstone’s chief offering officer, Tony James, has no idea when this things will clear up but did call the situation a “black hole.” In fact, the problems seem to be spreading into Blackstone’s commercial real estate business, which saw a 44% drop in revenues to $109.1 million.
So in the meantime, Blackstone plans to focus on smaller deals, minority investments and even long positions in mortgage investments. After all, black holes can ultimately turn into good investments, right?
Keep in mind that Blackstone has been around for roughly 20 years and has seen various disruptive market cycles. The experience might payoff. According to the conference call, James indicated that the firm has focused its portfolio on defensive categories, such as on companies in healthcare, consumer products and healthcare. There has also been a focus on Asia, which should get a boost from the $3 billion investment from the Chinese government.
What’s more, when the private equity market got frothy early this year, Blackstone remained disciplined. James said that Blackstone lost the bids on 90% of potential deals.
So as a public company and billions in fresh capital, Blackstone is positioned nicely to capitalize on financial wreckage. True, it might take some time to get returns. Then again, when it comes to investing in alternative investments, the strategy is to take the long view. And as seen with the history of Blackstone, it has worked quite well.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements
Share This
Share This
No Comments »
Filed under: Deals, The Blackstone Group, Rumors, Financials and analyticals, Engagements, Private equity industry, Investments, Public or private?
 Allegheny Tech (NYSE: ATI) is recently up $2.60 to $96.83 on renewed buyout chatter. ATI, a diversified specialty metals producer, has a market cap of $9.4 billion. ATI November 105 calls have traded 155 times on transaction volume of 2,017 contracts, above its open interest of 1,813 contracts. ATI November 95 straddle is priced at $7.50. ATI December option implied volatility of 53 is above its 26-week average of 43 according to Track Data, suggesting more massive price risks.
Alliance Data Sys (NYSE: ADS), a provider of loyalty and marketing solutions derived from transaction-rich data, announced on 5/17 it would be acquired for $81.75 in cash ($7.8 billion) by Blackstone Capital Partners (NYSE: BX). ADS is recently trading at $76.91. ADS call option volume of 5,935 contracts compares to put volume of 28,841 contracts. BX is expected to close on the purchase of ADS before the end of the year. ADS December option implied volatility of 26 is above its 19-week average of 16 according to Track Data, suggesting bigger risk.
Merger Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Share This
Share This
No Comments »
Filed under: Deals, The Blackstone Group, Rumors, Financials and analyticals, Engagements, Private equity industry, Investments, Public or private?
Allegheny Tech (NYSE: ATI) is recently up $2.60 to $96.83 on renewed buyout chatter. ATI, a diversified specialty metals producer, has a market cap of $9.4 billion. ATI November 105 calls have traded 155 times on transaction volume of 2,017 contracts, above its open interest of 1,813 contracts. ATI November 95 straddle is priced at $7.50. ATI December option implied volatility of 53 is above its 26-week average of 43 according to Track Data, suggesting more massive price risks.
Alliance Data Sys (NYSE: ADS), a provider of loyalty and marketing solutions derived from transaction-rich data, announced on 5/17 it would be acquired for $81.75 in cash ($7.8 billion) by Blackstone Capital Partners (NYSE: BX). ADS is recently trading at $76.91. ADS call option volume of 5,935 contracts compares to put volume of 28,841 contracts. BX is expected to shut on the purchase of ADS before the end of the year. ADS December option implied volatility of 26 is above its 19-week average of 16 according to Track Data, suggesting more massive risk.
Merger Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Share This
Share This
No Comments »
Filed under: Rumors, Financials and analyticals
Today’s headlines that IBM (NYSE: IBM) Is looking at beefing up its security offerings raises the question if management would acquire Israel-based Check Point Software (NASDAQ: CHKP). Val Rahmani, IBM’s general manager of infrastructure management for global technology services, sees security as a key to growth. Val said, “We’re looking at a lot of different companies right now, as we always do in a number of different spaces within security.”
Until now, the thought on the Street was that Check Point was going to continue as a stand-alone company, but with IBM on the prowl, it might be too much for CEO Gil Schwed to resist. Check Point currently trades at a market cap of $5.53 billion, and an acquisition would certainly come with a much higher price tag. Based on valuation, it would take between $7-8 billion to purchase the company. For deep-pocketed IBM, that’s not too high a price. For Schwed, a takeover at that price would tough to reject, and it would break all records for M&A of an Israeli company.
Based on IBM’s track record, I would doubt that it is going to try to grow its own security business organically; rather, it will most probably purchase a serious player. Stay tuned to see if that player will be Check Point.
Disclosure: Writer holds a position in CHKP. He has no other position in any stock mentioned as of 11/2/07.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.
Share This
Share This
No Comments »
Filed under: Rumors, Financials and analyticals
Today’s headlines that IBM (NYSE: IBM) Is looking at beefing up its security offerings raises the question if management would acquire Israel-based Check Point Software (NASDAQ: CHKP). Val Rahmani, IBM’s general manager of infrastructure management for global technology services, sees security as a key to growth. Val said, “We’re looking at a lot of different companies right now, as we always do in a number of different spaces within security.”
Until now, the thought on the Street was that Check Point was going to continue as a stand-alone company, but with IBM on the prowl, it may be too much for CEO Gil Schwed to resist. Check Point currently trades at a market cap of $5.53 billion, and an acquisition would certainly come with a much higher price tag. Based on valuation, it would take between $7-8 billion to buy the company. For deep-pocketed IBM, that’s not too high a price. For Schwed, a takeover at that price would tough to reject, and it would break all records for M&A of an Israeli company.
Based on IBM’s track record, I would doubt that it is going to try to grow its own security business organically; rather, it will most probably purchase a serious player. Stay tuned to see if that player will be Check Point.
Disclosure: Writer holds a position in CHKP. He has no other position in any stock mentioned as of 11/2/07.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.
Share This
Share This
No Comments »
Filed under: Financials and analyticals, Value and lack thereof
While it has been shaky so far, Wall Street is finding ways to deal with the massive buyout loan overhang. Then again, in some cases - such as with the failure of the Harman International Industries Inc. (NYSE: HAR) buyout - things have been fairly brutal.
Ironically enough, this situation can be an opportunity. In fact, according to a report in Bloomberg.com, Lehman Brothers Holdings Inc. (NYSE: LEH) has put together a $3 billion fund to invest in leveraged loans.
It does seem like a good idea. After all, there has been quite a bit of distressed selling. And, there are many quality issues on the market. Of course, Lehman is not alone. Other such funds include offerings from BlackRock and Eaton Vance. No doubt, I suspect this is only the beginning.
So, yet again, Wall Street has found a way to deal with a massive mess — and in the process, will probably make a nice profit.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements
Share This
Share This
No Comments »
Filed under: Financials and analyticals, Value and lack thereof
While it has been shaky so far, Wall Street is finding ways to deal with the big buyout loan overhang. Then again, in some cases - such as with the failure of the Harman International Industries Inc. (NYSE: HAR) buyout - things have been fairly brutal.
Ironically enough, this situation can be an opportunity. In fact, according to a report in Bloomberg.com, Lehman Brothers Holdings Inc. (NYSE: LEH) has put together a $3 billion fund to invest in leveraged loans.
It does seem like a good idea. After all, there has been quite a bit of distressed selling. And, there are many quality issues on the market. Of course, Lehman is not alone. Other such funds include offerings from BlackRock and Eaton Vance. No doubt, I suspect this is only the beginning.
So, yet again, Wall Street has found a way to deal with a massive mess — and in the process, will probably make a nice profit.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements
Share This
Share This
No Comments »
Filed under: Deals, KKR, Financials and analyticals, Texas Pacific Group, TXU Inc., 2007
Yesterday’s $11.5 billion debt offering for Energy Future Holdings, formerly known as TXU Inc, proceeded nicely considering the market turmoil of the last few weeks, according to TheDeal.com.
It’s still just a small portion of the $36 billion commitment, but the discounts were smaller than expected. This must come as a relief to KKR and Texas Pacific Group, which launched the $44 billion buyout in February.
Does this mean the debt markets are recovering? Perhaps. Meanwhile, there’s still a lot of debt to sell.
Share This
Share This
No Comments »
Filed under: Deals, KKR, Financials and analyticals, Texas Pacific Group, TXU Inc., 2007
Yesterday’s $11.5 billion debt offering for Energy Future Holdings, formerly known as TXU Inc, proceeded nicely considering the market turmoil of the last few weeks, according to TheDeal.com.
It’s still just a small portion of the $36 billion commitment, but the discounts were smaller than expected. This must come as a relief to KKR and Texas Pacific Group, which launched the $44 billion buyout in February.
Does this mean the debt markets are recovering? Perhaps. Meanwhile, there’s still a lot of debt to sell.
Share This
Share This
No Comments »
|
Entries (RSS)