James Says Use Buyouts to Shoot Lights, Not Hedge Funds – Bloomberg 09-18-14

Salient to Investors:

  • Tony James at Blackstone said hedge funds are a way to play the stock market with lower volatility and lower returns – shoot-the-lights-out returns are best left to private equity and real estate.
  • Neil Chriss at Hutchin Hill Capital said Calpers’ hedge-fund allocation was not big enough to move the needle but big enough to require real resources.
  • Wilshire Trust Universe Comparison Service said pensions with more than $5 billion in assets had an average of 1.35% in hedge funds as of June, versus 0.85% in 2008. Public retirement plans with $1 billion or more in assets generated a 5.1% annualized return from hedge-fund investments in the 3 years ended June 30 versus 5.3% from fixed-income holdings, 11.5% from private-equity, and 12.7% from stocks.

Read the full article at  http://www.bloomberg.com/news/2014-09-18/james-says-use-buyouts-to-shoot-lights-not-hedge-funds.html

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Blackstone’s Home Buying Binge Ends as Prices Surge: Mortgages – Bloomberg 03-13-14

Salient to Investors:

Jonathan Gray at Blackstone said:


  • The institutional buying wave has passed and Blackstone’s acquisition pace has declined 70 percent from its peak last year
  • Blackstone has narrowed most of its purchasing to Seattle, Atlanta, Miami, Orlando and Tampa.
  • Institutional buyers are tapering their buying and are in a relatively limited number of markets, yet home prices continue to rise strongly, even in markets where institutional buyers have not purchased a single home.
  • Institutional investors are not going away even though their size will remain a modest part of the market.


Private-equity firms, hedge funds, REITs et al have spent more than $20 billion to buy as many as 200,000 rental homes in the last 2 years.

American Homes 4 Rent and Colony American Homes have been scaling back as home prices have risen 24 percent since a post-bubble low in March 2012.

Jade Rahmani at Keefe, Bruyette & Woods said large investors are focusing on fewer locations as they gain experience and prices rise and account for at most 10 percent of the 2 million homes bought by investors in the last 2 years.

RealtyTrac said corporate investors bought 25 percent of homes sold in the Atlanta region, where prices are up 37 percent since the March 2012 trough.

Read the full article at http://www.bloomberg.com/news/2014-03-14/blackstone-s-home-buying-binge-ends-as-prices-surge-mortgages.html

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Blackstone’s Baratta Sees Stock Rally Lasting Two Years – Bloomberg 12-05-13

Salient to Investors:

Joseph Baratta at Blackstone said:

  • The stock market rally may last 2 more years with compound annual growth of 8% to 10%, as long as the Fed provides support.
  •  Equity markets are not overvalued when measured by the prices buyout firms are paying for companies.
  • US economic fundamentals are strong, sentiment is very positive, earnings have been growing, the Fed is quite accommodating.
  • Private-equity firms have been taking profits – Blackstone has sold $10 billion in assets in the past 12 months.
  • Higher interest rates and weaker markets 5 years from now could make it harder to profit from selling investments. With the Fed expected to begin scaling back QE, Blackstone is seeking deals that require less debt financing because the next buyer will have less access to capital and it will cost more.

Kyle Bass at Hayman Capital Mgmt said many investors are wise to buy stocks, and equities are the natural place for pensions and hedge funds.

Industry players from Leon Black at Apollo Global Mgmt to Wesley Edens at Fortress Investment said the Fed-fueled market rally makes it an ideal time to exit investments. Black says it is a fabulous time to be selling and is selling everything that is not nailed down in his company’s portfolio.

Read the full article at http://www.bloomberg.com/news/2013-12-05/blackstone-s-baratta-sees-stock-rally-lasting-two-years.html

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