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No. of Recommendations: 1
Not particularly surprising. I had thought they might wait another year or so, but I guess not. 3 down - ARES, KKR and now BX.
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No. of Recommendations: 1
Not particularly surprising. I had thought they might wait another year or so, but I guess not. 3 down - ARES, KKR and now BX.

I wish the supplemental presentation provided more information about their distribution policy going forward. Guess we will have to wait for the conference call.

ET
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I wish the supplemental presentation provided more information about their distribution policy going forward.

Yes, that is the #1 thing I am interested in.

The video said something about continuing to have a robust dividend and then mentioned a $2 FRE goal and $1.7 or 1.8 in incentive income over the last 5 years. They seemed to imply some connection, but nothing explicit.

I would prefer they simply keep the variable dividend policy, but I doubt that will be the case.
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From Matt Levine's Money Stuff:

Isn’t it a little weird? There are two basic ways to think about stock prices, the corporate finance approach, in which a stock price is the discounted present value of the company’s future cash flows, and the simpler supply-and-demand approach, in which a stock goes up when more people want to buy it. The efficient markets hypothesis suggests that these approaches are the same, that people’s desires to buy stocks are correlated with the expected cash flows, and that if for some reason a lot of people shun a stock with high expected cash flows then arbitrageurs will step in and nonetheless push the price up to the fair level. But in the real world executives sometimes decide to do things to reduce future cash flows in order to, as Blackstone’s Stephen Schwarzman said on Bloomberg Television this morning, “reach a dramatically larger audience.” Blackstone’s stock was up this morning on news that its future cash flows will be lower, but that more people will be able to buy it.
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Wow. BX says they aren't planning to change the dividend policy for the time being. I'm pretty surprised, but the current policy is my preference. So, I am glad they are going to continue with it, at least for now.
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Wow. BX says they aren't planning to change the dividend policy for the time being. I'm pretty surprised, but the current policy is my preference. So, I am glad they are going to continue with it, at least for now.

I was half expecting BX to pull an ARES and retain performance fees for growth (or stock buybacks) but I'm also happy to see them continue with the dividend policy. As management mentioned on the conference call, they can always reevaluate down the line.

Hopefully investors will begin to appreciate the asset-lite nature of the alternative asset management business. To be fair, the asset-lite nature applies to traditional asset management operations too. But so many of the traditional ones, with rare exception, are experiencing much more difficult times raising AUM outside of market appreciation tailwind.

KKR converted
ARES converted
OAK sells out
BX converts as of July 1

So whither APO and CG? CG doesn't have enough FRE earnings to make conversion as attractive and Apollo may be entering a harvest phase for its flagship PE fund so it might not make sense to convert now. But the market clearly wants it.

ET
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