Friday, September 25, 2009

Oppenheimer issues a Blackstone "challenge" (BX)

AlphaNinja - Good lord. Owning shares in a company is not supposed to present a "challenge."

Oppenheimer initiated coverage of asset manager Blackstone (BX) with a Perform (basically a "neutral" rating, saying that it is "a premier company in its sector, but presents a good many challenges for investors." While they like the company and think it's among the best in the industry, they worry about the following:

-->> Lack of comparable publicly traded peers to value it against
-->> Financial results are "difficult to understand."
-->>GAAP results are distorted by ongoing non-cash charges for employee vesting of the shares
-->>"Economic Net Income" benchmark has been distorted by non-cash reversals of performance fees and compensation accruals

Kudos to Oppenheimer for at least not telling people to BUY shares in a company that even they (even after weeks of research before initiating coverage) have difficulty "understanding."

I think I might be onto something. The more convoluted the ownership structure, the worse an investment is for shareholders? From the 2007 S-1:

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