This company invests on behalf of its investors and takes a large percentage of the profits if the investments pay off. It also receives fees on assets managed.
Even though it traded on Friday July 19 at a new 52-week high of $23.95, it still has a nice annual dividend yield. It did announce a reduction in its current quarterly dividend from 30 cents to 23 cents, but this may represent an attempt to reduce its payout ratio of 99%, which indicates the company may not need to leverage or borrow as much to pay a generous dividend.
In the most recent quarter ended June 30, the company sold $1.6 billion worth of equities in companies it owned. It also raised another $2.1 billion selling real estate that it had purchased when the bottom fell out of the market beginning in 2008.In its conference call, BX management said it expected this exuberantly profitable environment for selling assets to carry forward for the foreseeable future. That's a key sign of a great money management firm. It knows when to sell as keenly as it knows when to buy. Those who were prescient enough to buy shares of BX last fall when they were changing hands for around $13 are now up nearly 88% including dividends. Heck, if you bought shares on June 24 or 25 at around $20 a share, you're sitting on a stunning 19% profit. By many metrics the shares are still cheap. With its latest quarterly EPS results of 36 cents per share, or $211 million, its shares are trading at a forward (one-year) price-to-earnings ratio of slightly more than 8. BX's "economic net income" more than tripled from the same quarter last year to more than $703 million. This translates to a price-to-earnings-to-growth (PEG) ratio (five-year expected) of less than 0.70. "Economic net income" is a financial metric used to calculate the net income of publicly traded private-equity firms and to measure the value of their investments. It takes into account both realized and unrealized gains. It even factors in accounting anomalies inherent to these kinds of companies.
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