Blackrock (BLK) has one of my favorite CEO's and I like the company, but if I were only looking at the chart I'd have some concerns - the stock has begun trading below all key moving averages. Since I've added a lot of financial exposure elsewhere I am going to close this position and we'll assess later. It has been acting curiously weak considering the sector has had some of the "stars" of the market of late.
And as I wrote in the earnings roundup for Monday and Tuesday this weekend
former fund holding (and acting strange) Blackrock (BLK)
Now we see why it was "acting strange" or "acting curiously weak" - we have a significant miss out this morning: analysts had been expecting $1.96 EPS and it looks like they are coming in at $1.62. We sold in the upper $180s just a few weeks back - it is indicating somewhere in the $120s this morning, down from a $143 close yesterday.
- BlackRock Inc (BLK) posted a worse-than-expected 14.7 percent drop in third-quarter profit on Tuesday as slumping markets hurt its assets under management and the company booked mark-to-market losses. BlackRock, the largest publicly traded U.S. asset manager, said net income fell to $217.7 million, or $1.62 a share, from $255.2 million, or $1.94 a share, a year earlier.
The latest results included a nonoperating loss of 58 cents a share from adverse market effects on co-investments and seed capital investments. In the year-earlier quarter, BlackRock had a nonoperating gain of 23 cents a share on such investments.
Assets under management, the main driver of revenue and profit at money managers, fell to $1.26 trillion at the end of September from $1.3 trillion a year ago and $1.43 trillion at the end of June. The firm said the decline was due to lower asset valuations, outflows from money-market funds and the strengthening dollar. (not surprising considering how poor the market was in September) BlackRock said it had net outflows of $4.2 billion from its bond funds and $2.5 billion from its stock funds in the third quarter. There was also $1 billion pulled out of its alternative investments, a category that covers a range of products.
The mid-September bankruptcy of Lehman Brothers, the subsequent money market fund that "broke the buck" and the resulting meltdown of the financial markets led to net outflows, or money being pulled from various accounts, of $41.6 billion from money market funds and $12.2 billion from low fee securities lending portfolios, BlackRock said. That was partially offset by $13.8 billion of net inflows, or new money being investment, in cash management products.
"This is the only time I can remember that product diversification did not help -- every asset class has suffered, and all market participants have been affected," said Laurence Fink, chairman and chief executive officer in a statement. "No one, including BlackRock, is immune." (very similar to what I've been saying - there is simply no place to hide in this market as almost all asset classes have fallen together - deflation of assets)
- "Absent a significant turnaround, the severity of the market loss and the seismic shifts that have occurred in the financial services landscape will have profound implications for investors," said Fink. "Clients will need to reevaluate their assets and liabilities, reconsider allocation and diversification policies, and develop new investment strategies for the future."
Continuining operations still came in at $2.09 EPS but a lot of one time hits. This is still a quality franchise led by one of the best CEOs in my opinion; but obviously we are living through historic dislocations and no one is escaping. For those with longer time frames the stock price as it opens today should begin to provide excellent value.
No position
