Hilton Hotels which was taken private by Blackstone (NYSE:BX) several years ago in an incredibly debt laden deal is looking to issue some $1.25 Billion in common shares and get the stock trading again. Proceeds will go to pay down existing indebtedness and general working capital.
So basically investors are trading debt dollars for equity dollars without changing anything in the business. The debt holders are looking for some pay-down to get out of nose bleed territory.
The investors who are stepping up to the bat are foolish. Enterprise risk remains the same. The capital will not be a driver for wealth creation. Blackstone is just paying down its debt.
Smart Blackstone. Stupid investors. If you want to get in on hotels and commercial properties there are lots of better ways than to be dazzled by an excellent marketing brand with an over levered balance sheet.
George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti
Blackstone Group (NYSE:BX) is a private equity giant. What kind of board of directors do they have and what do they need? Considering their role in life is financial engineering the average Blackstone executive has a very heightened sense of the strategic. Where would the board fit in?
Take a look at some of the independent directors and see if a theme or two comes out.
Brian Mulroney 73 is the former prime minister of Canada. He was in the saddle with President Ronald Regan and Prime Minister Maggie Thatcher. The man is clearly there for political networking.
William Parrett 67 is the former CEO of Deloitte Touche Tohmatsu. Blackstone will buy their accounting advice on a deal by deal basis and charge the customer. His value will again be contacts and networks.
Richard Jenrette 83 is the retired founder and former Chair and CEO of Donaldson, Lufkin & Jenrette. Stock trading advice? Meh! He does have an element of sainthood and gravitas.
Jay Light 71 dean emeritus Harvard Business School. Contacts, prestige, contacts and then prestige again.
This is not a working board which acts as the shareholders representative. This is an old school board with contacts and connections to help the Blackstone Group. nothing wrong with that. Just that it does not fit modern-day governance practices.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski
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Blackstone (NYSE:BX) released Q4 numbers. Lets be honest. Who understands it? Who can predict or forecast it. Basically its all about transaction fees, assets under administration (AUM) and carried interest. The earnings release provides a little bit of elevator commentary. This number was up. That number was down. Still cannot understand.
So in conclusion if the market cannot figure it out why is there value? Volatility and Wall of Worry issues abound.
So when the chief guy offers up this quote you know he is not trying to help you out. Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “Despite volatile markets and struggling economies, Blackstone had strong performance in 2011. Our investors view us as a critical partner, helping them protect and grow their capital.”
That’s promotional if you ask me. By the way he also commented that investments made by Blackstone created employment but did not offer up any examples. You would think they could prove that one.
George Gutowski writes from a caveat emptor perspective.
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Blackstone (NYSE:BX) reported results for The Asia Tigers Fund (NYSE:GRR).The report is useless but a statutory requirement. Fund values fluctuate daily driven by underlying stock valuations. The report does not discuss any strategy or investment thinking. It merely refers to a long-term goal of capital gains. The fund is under $100 million but it does pay Blackstone a lucrative management fee of 2.24%.
Investors will note that the fund is well diversified throughout Asia and is also well diversified across several industry segments. You have to wonder about the efficiency of intellectual capital. The fund is small and 2.24% will not carry the expertise necessary to understand all of Asia sliced and diced into several different industries.
Not a bad annuity machine for Blackstone. The investors need to think about the rationale on this one.
disclosure: “George Gutowski” writes from a “Caveat Emptor perspective” I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.
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Dynegy (DYN) is facing a crucial vote on Nov 17, 2010 just a few days from now.They can accept what Blackstone Group (BX) has on the table or refuse. The refusal seems to be certain death. No other competing offers are on the table. No one was interested during the 40 day go shop period after the Blackstone offer was made public.
What is thoroughly confusing is the shouting match being conducted by the three major proxy voting recommendation services. Institutional Shareholder Services (ISS) recommends taking the deal. They point out no other offers and death spiral options if Blackstone walks away.
Glass Lewis & Company and Proxy Governance argue in favour refusing the deal. They claim the analysis in favour of Blackstone is flawed. In this case it would seem that the proxy research recommendation firms have not added value to the process. The arguments pro and con have not been much altered. The investor seems to be on his own. Where are the lawsuits against the board for poor governance that lead to this discouraging state of affairs.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.