Monday was a fairly middling day for the stock market. At closing, it wasn’t far away from the levels at which it opened.
The results for individual stocks were generally mixed, with many rising in price and plenty dropping. Among these stocks were a veteran financial services company and a new-ish pet supplies purveyor.
After the trading day they had, let’s have a look at whether the two companies are potential buys at now-discounted prices…
The Blackstone Group
Shares of The Blackstone Group (NYSE:BX) were down by nearly 3% at Monday’s close. Declines are rare for the sprawling asset manager and financial conglomerate these days. It’s been a very popular stock for quite some time.
The company, which has significant real estate investments, on Monday announced the latest in a long string of property deals. In this case, one of its affiliates has agreed to buy Colony Industrial, the industrial real estate portfolio of peer Colony Capital.
The announced price was $5.9 billion, and for that sum, Blackstone is getting plenty from Colony Capital — 465 light industrial facilities spread across 26 states, including strategic major city or major city-adjacent locales such as Atlanta and northern New Jersey.
But Blackstone isn’t the only real estate investor dipping into this sector. Most of the assets in the deal can service the so-called “last-mile” of the delivery process. This segment is popular due to intensifying competition for retailers to get their goods to customers quicker than the next guy (I’m looking at you, Amazon.com).
Even for a company with very deep pockets and enough connections in big finance to score relatively cheap funding, $5.9 billion is a lot to finance. Perhaps investors are concerned that Blackstone’s coming a bit too hard and too late into the segment, and that (at this stage) the returns won’t be high enough to justify the effort and expense.
They shouldn’t be so concerned. Blackstone had, in fact, been relatively underinvested. It held a lot of cash in its coffers, and it was relatively light in terms of hard assets — $5.9 billion is a big chunk, yes, but it’s just a nugget if we consider Blackstone’s nearly $550 billion in assets under management (AUM). It’s also proven to be a very savvy investor at times.
All that said, this might be a good opportunity to take advantage of the share price dip, then.
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