Thursday, August 27, 2009

Blackstone Group (BX) Becomes Top "Fund of Fund" Player

This came out of left field... somehow Blackstone Group (BX) has become the #1 player in fund of (hedge) funds. I guess not getting caught up with Bernie Madoff has its priveledges. Via NY Post Considering this is not their core business, it is just icing on the cake. But really why am I bothering with such stocks when I could be buying AIG or Freddie Mac.
  • Blackstone boss Steve Schwarzman has quietly moved to the head of the class when it comes to the lucrative business of compiling and managing hedge-fund portfolios for investors.
  • As rivals like HSBC and Man Investments suffered double-digit drops in their respective units through the end of June, Blackstone's grew 25 percent to $25 billion, according to London-based research group Hedge Fund Journal.
  • That pushes the New York firm -- known primarily for its private-equity investments -- to the unexpected position of top dog when it comes to the profitable dealings in hedge fund portfolios, also known as funds of hedge funds.
  • In the process, Blackstone has rolled over former kingpins. HSBC's assets dropped nearly 52 percent to $22.2 billion, while Man's assets fell more than 46 percent to $23 billion. Switzerland's Union Bancaire PrivĂ©e's dough declined almost 28 percent to $23.8 billion.
  • The only firm ahead of Blackstone is UBS, with $31.4 billion, according to the report. However, some industry sources point out that $16 billion of that total represents assets that UBS oversees in an advisory role rather than managed directly.
  • To be sure, a good part of Blackstone's success can be traced to the mistakes of its peers. UBP and Man, for example, had funds exposed to Ponzi schemer Bernie Madoff. UBP also lost favor after delaying or suspending some investor withdrawals.
  • The firm told investors earlier this month that it expects to add $1 billion to its business in 2009, although a person familiar with the unit said the number is on track to be higher.
Long Blackstone Group in fund; no personal position

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