If you have followed the Blackstone Group L.P. (NYSE:BX) units on a post-IPO basis, then you will know it is almost impossible to cover without noting how the listed unit has traded lower and lower. But let’s get past the past the potential taxation changes that may be imposed and the obvious credit crunch that all private equity firms are facing. The ‘underwriter’s quiet period’ is basically up, so brokerage firms that participated in the underwriting of the IPO can begin initiating coverage of the units with their equivalents of "Buy, Sell, or Hold."
Underwriters have not been able to let their analysts at the brokerage firms initiate coverage because of those quiet period dates creating a coverage blackout. A contact at Banc of America has said the quiet period ends today for research analysts and a call into John Ford at Blackstone yielded the same answer. Unfortunately, telephone calls into syndicate desks at other underwriters gave mixed results and it wouldn’t be surprising if some of the reports with coverage initiation from brokerage firm analysts don’t make it out until next week.
It will be interesting to see is just how the "initiations of coverage" will come out from the slew of analysts that were in the syndicate. Bear Wagner, a Bear Stearns Cos. specialist operation, is the listed NYSE specialist. Morgan Stanley and Citigroup were the lead underwriters; and the list of co-managers was huge: Merrill Lynch, Lehman, Credit Suisse, ABN AMRO, Deutsche Bank, J.P.Morgan, Lazard, Banc of America, Bear Stearns, UBS, Goldman Sachs, Wells Fargo, Nikko Citigroup, and SEB Enskilda. This doesn’t mean that all of the underwriters will start coverage on the same day and it doesn’t mean they will all line up with Buy or Hold ratings. If post-IPO trading history is static then there could be many mixed analyst calls, but frankly making ANY prediction or assumption on something unique as a private equity analyst rating is something that hasn’t really had many comparisons.
When these analyst reports and ratings start coming out, you can probably bet that Blackstone will again command much of the media time. Interestingly enough, this may be what has acted as a floor over the last few days. Shares hit their lows back on last Thursday and have managed to stay above those lows during the weak markets since then. Stay tuned Wednesday, because this could easily be one of the focal stocks that gets much of the media attention again. Blackstone itself is also in its own current quiet period ahead of its upcoming earnings report.
Jon C. Ogg
July 31, 2007
Jon Ogg can be reached at firstname.lastname@example.org; he does not own securities in the companies he covers.