Mark DeCambre
Prashant Bhatia, analyst at Citi in New York, says yes -- because Blackstone will perform over the long term.
"Our analysis of Blackstone's [assets under management] leads us to conclude that the future performance of existing funds will be excellent," the analyst writes in a Wednesday research report titled "There's a Diamond Inside This Blackstone." Indeed, Bhatia compares Blackstone's private-equity returns favorably to funds such as Berkshire Hathaway(BRKA Quote - Cramer on BRKA - Stock Picks), the holding company run by legendary investor Warren Buffett. "After evaluating 120 public comparable entities vs. Blackstone's private holdings," the report adds, "we estimate that on a combined basis the funds have over $13 billion of gains." The analyst argues that the private-equity shop's stellar performance -- and its coffers, stacked with $16 billion in ready cash to take advantage of opportunities -- are major buying points for investors. Blackstone does have its strong points. It has some $88 billion in assets under management. Like Goldman Sachs(GS Quote - Cramer on GS - Stock Picks) and similar institutions, it charges steep fees for its advice -- particularly in the lucrative areas of strategic advice and mergers and acquisitions. The real question, however, is who ultimately benefits even if Blackstone does knock the the cover off the ball. Will the outsized gains that Blackstone has been posting trickle down to investors?
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