Is Blackstone the Best Bull Market Stock?

06/25/2019 5:00 am EST

Focus: FINANCIALS

Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

In the right environment, we like to hop on board the best bull market stocks—such as asset managers that thrives with rising stock prices and asset values, explains Mike Cintolo, editor of Cabot Growth Stock Investor.

Interestingly, this group of stocks didn’t do much during the market’s early-year romp higher, but now we’re seeing a few shape up.

Our favorite by far is Blackstone Group (BX), which is a giant ($512 billion in assets under management) alternative asset manager with big stakes in real estate and private equity, as well as credit and hedge funds, too.

The firm has a crazy record of success (cash flow has grown 19% annually for the past 10 years), which has led to increasing dividend payouts and net asset values.

Despite that, though, the stock didn’t do much for the past few years, but that’s now changed, and the big catalyst was the firm’s announcement that it’s switching from a partnership (messy structure, K-1 tax form for investors) to a C-Corp (qualified dividends, 1099 tax form), which should greatly expand its investor base.

The market liked the news, with BX surging to multi-year highs above 40 in May, having a quick shakeout with the market a couple of weeks ago and then surging back to new highs on big volume as soon as the market rebounded.

It’s unlikely to be a barnburner, but the C-Corp move (which will become official on June 30) should allow the stock to trade more based on the firm’s growth in assets and dividends, and less on complicated tax implications. We bought a full-sized (10% of the portfolio) position.

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