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Blackstone: Another Tell For the Financials


This may be the ultimate tell for the financials... Blackstone finished the week and the day Friday positive...

This may be the ultimate tell for the financials -- Blackstone (BX) finished the week and the day Friday positive and maybe most telling is that hourlies have turned positive by almost any measure. Even the daily chart is moving towards neutral. MACD is still negative but we got our first positive cross. Money flow has also turned neutral which is telling with the massive negativity surrounding this name since about the third hour they started trading.

I continue to think the buyout boom has at least 3-4 innings left overall. Meanwhile the cash rich tech and healthcare sectors have seen minor M&A activity, their game is just starting. BX has another $22 bln in its stockpile, and China is looking to deploy huge amounts of capital into other countries. It would not surprise me to see the tech savvy Chinese utilize BX to find a few tech names to roll-up.

Analyst coverage on BX was mainly bullish but conservative. Price targets around the offer price of $31 leave a lot of room for increases later on.

BX reminds me of Lazard (LAZ) when it IPO'd, or even the vaunted Goldman Sachs (GS) IPO. LAZ got off to a sluggish start as well, but found its footing in a few months and the stock has performed quite well. GS also suffered some tough initial sledding. If memory serves, they priced well and then quickly sold off to lows before catching the last few months of the 2000 market bubble. You probably know the rest of the GS story.

By the way, LAZ had a huge intra-day reversal Friday. LAZ gapped lower that morning, then quickly reversed and moved strongly higher for most of the day, finishing over 4% higher. This is a notable move for a finance stock in this market and puts LAZ on my primary watch list.

Also, should anyone really be surprised with the quarter BX just reported? The company does have a conference call later and I'll provide an update if there is anything of note, I'm not sure how much information its quarterly calls will provide. BX is historically tight lipped, as it should be and we don't know yet if the company will adopt the strategy of some other newer companies -- like not providing guidance. Also, its business will have significant volatility from a quarter to quarter basis depending on deal flow, buyouts and general market conditiions, so I would be surprised if guidance is issued. I think the key on the call will be questions related to what BX is experiencing regarding the current credit conditions.
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Position in BX

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