Blackrock (BLK) Quarter Solid but a Bit of a Miss

Blackrock (BLK) is a prime example of the irony in the stock market. Other companies that have been pummeled in financials, even the "most respected" such as JPMorgan (JPM) (profit cut in half) and Wells Fargo (WFC) are showing significant reductions in profitability but their earnings are "better than expected" .... meanwhile Blackrock is growing like a weed (relative to the financial space) but expectations were so high, it was not able to surpass them with it's results. So the names whose businesses have been hit hard are jumping this AM on their earnings, and Blackrock is taking a bit of a hit. Again, it is all about expectations.... when expectations are rock bottom as it is for most financials , and those sharply lowered expectations are beaten - the lemmings clap like seals and it's time to "buy buy buy" - same for Intel, which just lowered its guidance in March yet "beat it" not 4 weeks later.... so the whole market rejoices this "strength". People have short memories. Even if business is sharply degrading year over year - as long as you beat the recently reduced estimates the champagne corks come popping off - same thing is happening in retail whenever those names pop.

And the companies which are growing year over year, are treated like dirt, because they are only matching or slightly missing estimates which have not been lowered 3-4 weeks ago :) It is ironic, but this is the market - and something that will flummox newbie investors all the time. Again, gun to head if I were forced to buy banks, JPMorgan and Wells Fargo would be two I'd be getting into, but just like Intel's report was not that good, neither were these - but the bar is set so low that almost anything positive can be spun by the bulls into "awesome stuff!" I'll stick with the best of breed...

• Money manager BlackRock Inc (BLK) reported higher first-quarter profit on Wednesday as assets under management grew, but earnings fell far short of Wall Street estimates, hurt by market turmoil.
• "As the second quarter begins, markets remain highly unstable and continue to be a challenge for investors worldwide," Chairman and Chief Executive Laurence Fink said in a statement.
• First-quarter profit was down from the 2007 fourth quarter, but BlackRock, the largest publicly traded U.S. asset management company, said its new business pipeline stood at a record $105.8 billion as of April 14.
• Net income for the first quarter was $242 million, or $1.82 per share, up from $195.4 million, or $1.48 per share, a year earlier. Excluding costs related to compensation expenses, the company earned $1.90 a share. Analysts' average earnings forecast was $2.00 per share, according to Reuters Estimates.
• Assets under management, the main driver of revenue and profits at money management companies, rose to $1.364 trillion as of the end of March, up 18 percent from a year earlier, driven by acquisitions.
• Performance fees earned on its hedge funds tumbled to $42 million in the first quarter from $153 million in the fourth quarter. The firm said this was mainly "due to fewer performance fee contracts with performance measurement periods that concluded in the first quarter."
• "Solid quarter but clearly the bar just got too high for (BlackRock)," Douglas Sipkin, analyst at Wachovia Capital Markets, wrote in a note to clients. "The combination of weaker performance fees and weak non-investment income was too much to overcome to maintain the same level of outperformance." But Sipkin added that he was heartened by the firm's $106 billion business backlog.

Long Blackrock in fund; no personal position