What’s going on here?
Alternative asset manager Blackstone announced better-than-expected third-quarter earnings on Thursday, thanks to a new record.
What does this mean?
Blackstone now has assets worth $1.1 trillion in its pocket – its fattest stash ever. That’s partly thanks to investors handing over $41 billion in crisp new bills to look after, maybe spurred on by the more rosy market outlook now that US interest rates have started to fall. And this time, more money has meant, uh, fewer problems. See, Blackstone makes bank by charging fees on the assets under its management, so that record high resulted in more revenue and profit last quarter. That meant Blackstone’s third-quarter profit was 27% higher than analysts predicted.
Why should I care?
For markets: Making room for more.
Investors have been buzzing about Blackstone’s recent spending spree, including a $16 billion purchase of Australian data center developer AirTrunk and an $8.4 billion deal with Vista Equity Partners to buy work management platform Smartsheet. The reason for the aggressive expansion is straightforward enough: by being the biggest cheese in the fast-growing universe of alternative investments, Blackstone hopes to keep competitors at bay and profit growing.
For you personally: You’re not so different from the pros.
The investors giving billions to Blackstone last quarter are walking hand in hand with data from investment manager BlackRock (no relation). ’Rock showed investors piled into alternatives – think real estate, private debt, and other long-term, hard-to-trade assets – last quarter. And those alternatives are ’Stone’s whole business, so no wonder it came up smiling. What’s more, it all stacks up with what you’ve been thinking: the recent Modern Investor Pulse showed around 20% of retail investors are considering investing in alternatives right now.