The Motley Fool’s readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I’ve decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here’s my previous selection.
This week, I’d like to highlight the mother of all private-equity firms, The Blackstone Group L.P. (NYSE:BX) and its CEO, Steve Schwarzman.
Kudos to you, Mr. Schwarzman
As you might imagine, companies like The Blackstone Group L.P. (NYSE:BX) that invest in and buy out businesses, as well as run hedge funds and invest in commercial real estate markets, require a stable economy and interest rate environment in order to be successful. The recession in 2009 practically turned this sector on its head. Commercial real estate markets are only now beginning to recover with wealthier investors only recently began returning their money back into the hands of asset managers like Blackstone.
This isn’t to say, even with the economy on the mend, that the asset management sector hasn’t struggled mightily. In order to attract new money, KKR & Co. L.P. (NYSE:KKR) and The Blackstone Group L.P. (NYSE:BX) — both companies known to attract the upper echelon of wage-earners, have lowered their minimum buy-in requirements for their hedge funds down to just $2,500. Even Carlyle Group LP (NASDAQ:CG), which had previously restricted access to the top 1% of all income earners, is lowering its minimum investing requirements a bit to attract new investors as my Foolish colleague Amanda Alix reported in March.
However, The Blackstone Group L.P. (NYSE:BX), which has an astounding $218.2 billion in assets under management, has been able to exploit numerous opportunities, as well as throw its weight around, to turn profits for its company and investors and stand out among its peers. Over the past 12 months, the company has boosted its gross inflows by $34 billion, of which $31 billion was organic. Furthermore, its distributable earnings — which can vary from quarter to quarter with P/E firms — jumped 134% to $0.33 per unit.
One of the biggest boosts in its most recent quarter came from The Blackstone Group L.P. (NYSE:BX)’s private-equity portfolio which saw economic income rise 15% from the previous year. More importantly, it saw the IPO of theme park owner SeaWorld Entertainment Inc (NYSE:SEAS), allowing Blackstone to sell 16 million shares and generate another “whale” of a return for investors.
But, just as The Blackstone Group L.P. (NYSE:BX)’s Steve Schwarzman has been heralded for finding great deals and delivering big returns to shareholders, he should be praised for knowing when to walk away as well. Earlier this year, for instance, Blackstone made a $15 per share bid to acquire a majority stake in Dell Inc. (NASDAQ:DELL) as a competing bid to Silver Lake Partners and CEO Michael Dell’s $13.65 per share cash bid. Blackstone wisely walked away from its bid after an IDC report noted that PC sales fell 14% in the first quarter and the PC business was deteriorating faster than anyone had first imagined because of smartphones and tablets.