Wall Street banks are having their best run in over a decade, while Blackstone Inc. (NYSE:BX), heading into its second-quarter earnings today, has missed nearly all of it.
Banks Pull Ahead of Private Capital
Shares of the largest U.S. private capital groups have slumped more than 15% this year and over 20% in the past 12 months, Financial Times reported on July 22, 2026, even as The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM), and Citigroup Inc. (NYSE:C) have each climbed more than 18% over the same stretch, fueled by a record IPO and deal cycle including SpaceX’s public listing. Biotech M&A has reached a record pace this year, as Big Pharma works to replenish pipelines ahead of a series of patent expirations.
Blackstone Inc. (NYSE:BX), which once traded at a larger market value than Goldman Sachs or Morgan Stanley, now has less than half the market capitalization of either bank, a reversal that Citizens analyst Devin Ryan has described as a genuine rotation out of alternative asset managers and back into banks.
Why the Boom Passed Blackstone By
The gap largely reflects how each side earns from the current deal boom. Banks collect underwriting and advisory fees directly from IPOs and mergers, while private capital groups benefit much less directly from IPO underwriting and advisory activity.
Blackstone’s own dealmaking has slowed, with a record $4 trillion backlog of unsold private equity deals limiting firms’ ability to exit positions and raise new funds.
Tariffs imposed last year made long-held holdings harder to close out, while rate pressure tied to the Iran conflict has kept borrowing costs elevated, adding to credit-distress concerns among leveraged portfolio companies.
A New Bet on Wealthy Individuals
Blackstone Inc. (NYSE:BX), one of the largest alternative asset managers with more than $1.3 trillion under management, is responding by widening its distribution beyond institutional money.
On July 22, 2026, the firm announced two new funds with Wellington Management and Vanguard blending public and private markets, aimed at wealthy individuals through Merrill and Bank of America Private Bank advisors. Global high-net-worth wealth reached $98.3 trillion by the end of 2025, according to Capgemini, and Blackstone President Jon Gray said the funds offer access to premium returns and diversification that this client base has been asking for.
Redemption Pressure Builds Elsewhere
That push comes as redemption pressure builds elsewhere in private markets.
Reuters reported on July 17 that Fitch Ratings found redemption requests rose at 10 of the 16 non-traded business development companies it tracks last quarter, averaging 10.3% of shares outstanding. Cox Capital Partners this week launched tender offers for Apollo, Ares, and HPS fund shares at discounts of 15% to 30% to net asset value. Gray has said private equity still posted strong inflows in June even as credit fund flows slowed; a split result today should help clarify.
Analysts Split on the Derating
Analysts are divided on what the derating means.
On July 20, 2026, HSBC raised its Blackstone Inc. (NYSE:BX) price target to $135 from $131 while keeping a Hold rating, arguing the sector’s slide this year leaves limited further downside. Three days earlier, Oppenheimer’s Chris Kotowski cut the firm’s target to $139 from $156 but kept an Outperform rating, telling investors to buy the weakness and calling the underperformance a cyclical dip that the market has mistaken for a structural shift.
Shares closed at $122.82 on July 22, 2026, down 20.32% year-to-date, and have remained nearly flat over the past month.
Hedge Fund Positioning
Hedge fund positioning reflects some of that caution.
Insider Monkey’s hedge fund database shows 84 of the 1,022 funds it tracks held Blackstone Inc. (NYSE:BX) shares in the first quarter of 2026, unchanged from 84 of 1,041 the prior quarter. D E Shaw was the largest hedge fund holder of Blackstone in the first quarter, after boosting its stake by 11,913% to $434.86 million. The same quarter, Renaissance Technologies opened a new position worth $164.60 million, while Cryder Capital raised its stake by 28% to $159.98 million, a holding that made up 10.45% of its portfolio, the largest weighting among Blackstone’s top holders.
Short Interest Climbs Into Earnings
Short interest moved the other way.
Shares short jumped to 23.14 million as of June 30, 2026, from 19.72 million a month earlier, pushing short interest to 3.13% of float, a smaller ratio than Apollo’s 5.92% or Ares’ 14.91%, but well above BlackRock’s 1.36%. Blackstone Inc. (NYSE:BX) also trades at the richest forward multiple of the group, 20.66 times earnings, ahead of Ares at 20.28, BlackRock at 18.66 and Apollo at 13.28, leaving little room for today’s numbers to disappoint.
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