NEW YORK (

TheStreet

) --

Blackstone

(BX) - Get Report

is up smartly in late Thursday trading after

Goldman Sachs

(GS) - Get Report

added the stock to its "conviction buys" list.

The leading brokerage is bullish about the private equity space as M&A appears set to rise off low levels with firms looking to put extra cash to work. It reiterated its buys on Blackstone,

KKR

(KKR) - Get Report

and

Fortress Investment

, arguing that performance fee potential for these firms was not yet priced.

"Current valuations offer a good entry point for exposure to one of the key asset management themes: secular growth in alternative investing," the report noted.

Blackstone was the firm's top buy, however, because the asset manager was well diversified and had near-term upside in the form of fee-related earnings potential that could kick in around late 2010 or early 2011 on $16 billion of "shadow" assets under management. Goldman Sachs has a $14.50 price target for the firm.

The stock closed up more than 4% at $11.01.

-- Reported by Shanthi Venkataraman in New York.

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