BlackRock's ETFs: Misunderstood Franchise?

10/18/2017 5:00 am EST


Todd Shaver

Founder and Editor-in-Chief,

BlackRock (BLK) was just recently upgraded to buy by Goldman Sachs and placed on the conviction buy list. We love to see Goldman follow us into the stocks we like, asserts Todd Shaver, editor of

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So why all the love for BlackRock right now? It really is as simple as this. The world of ETF investing is dominating the investment management business and BlackRock is the leading provider of ETF products, with $5.1 trillion of assets under management.

With employees in more than 30 countries who serve clients in over 100 countries across the globe, BlackRock provides a broad range of investment and risk management services to institutional and retail clients worldwide. The company’s flagship product line-up is the popular iShares ETFs.

These ETFs are used by everyone from charities, foundations and endowments to central banks, sovereign wealth funds and insurance companies, financial institutions, corporations and retail investors.

We think BlackRock is a compelling value trading at 17x next year’s consensus EPS estimate of $25. But don’t take it from just us.


One of the world’s best hedge funds, Third Point, just bought the stock and believes BlackRock is a “misunderstood franchise” with a massive 38% market share of exchange-traded funds.

Third Point’s CEO said he thinks this acceleration in ETFs is just getting started and BlackRock is valued like a traditional asset manager, but it has much greater potential for structural revenue growth and operating margin expansion.

We stand by our $510 price target and have already made some good ground on the path here since our initiation to the stock in late August at $415.

Price too high for you? Just buy 20 shares. Just buy 50 shares. Buy 11 shares. But get some BlackRock. Remember, the “price” is irrelevant.

What if BlackRock split their stock 10-1 next week? Would that change your thinking because you now have 10 times as many shares at $44 a share? You answered correctly if you said –— no. Of course. The price of the stock would change nothing.

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