Wall Street: Blackstone’s big lending bet

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TGIF! Dan DeFrancesco reporting for duty from NYC. If you've had a long week at work, just take solace in the fact that you, unlike British Prime Minister Liz Truss, were able to outlast a head of lettuce.

Today we've got former Goldman Sachs' partners teaming up on new endeavors, leaked org charts, and a star who is not happy with Tesla.

But first, can I interest you in a loan?


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Jon Gray

1. Blackstone has some money to lend

Blackstone, the world's largest private-equity firm and a big fan of warehouses, reported earnings on Thursday

The topline numbers were eye-opening, to say the least. Blackstone reported $2.3 million in net income for the quarter, an amount that probably could not cover the monthly mortgage payments of the four Blackstone executives on the earnings call.

By comparison, back in the good ole days (see: Q3 2021), Blackstone reported a profit of $1.4 billion. 

Despite such a drastic drop in profit, things are fine, so says Blackstone. Investment performance for its opportunistic real-estate portfolio and corporate private equity were only down marginally, 0.6% and 0.3%, respectively. Meanwhile, its hedge fund solutions business was up 1.2%. 

And its assets under management are up 30% in the past year to $951 billion, which puts it just shy of its goal of managing $1 trillion

Private credit was a point of interest on the earnings call. Blackstone reported its private credit unit was up 3% in the third quarter and 9.3% over the past 12 months.

And it seems there is even more opportunity to grow, as traditional lenders pull back due to concerns over the impending recession. 

Blackstone has no shortage of funds to lean into the space, with $182 billion in capital ready to be deployed. It's exactly the kind of war chest you want if things are about to get as bad as everyone seems to think they will. 

Jon Gray, Blackstone's president and No. 2 behind cofounder and CEO Stephen Schwarzman, acknowledged as much on Thursday's earnings call.

"With a record $182 billion of dry powder capital, we have the ability to take advantage of dislocations," Gray said, according to a transcript from research provider Sentieo. 

It is worth noting there is a noticeable difference between Blackstone's reported returns in private credit versus its liquid credit unit, which is down 4.6% over the past year, as the Financial Times noted.

The major distinction between the two sides is how those numbers are calculated. Blackstone marks its own private-credit book internally, while the liquid credit business is made up of assets that are traded, and priced, in the public markets. 

To read more about Blackstone's push into private credit, click here.


In other news:

Brad Pitt holding a bottled water

2. Dude, you're getting a Dell! MSD Partners LP, an investment firm that's an offshoot of Michael Dell's family office, is merging with BDT & Co., which works with founder- and family-owned businesses, The Wall Street Journal reported. The new investment and advisory firm will be co-run by former Goldman Sachs' bigwigs Byron Trott and Gregg Lemkau. Check out this Insider profile of Trott.

3. A Fed president spoke somewhere that a Fed president shouldn't really be speaking, The New York Times reported. James Bullard, the president of the Federal Reserve Bank of St. Louis, was a speaker at an invitation-only forum held by Citigroup that the media was not allowed to attend. And before you say we're just being salty, know that a former Fed president told the Times "this is not normal," and "the optics are terrible." Find out why.

4. Professional traders learned a lesson from last year's r/WallStreetBets frenzy, but it's not necessarily a good thing. More traders across the Street are trading options right before their expiry, which is "acting like jet fuel being dumped on the already out of control 'macro' fire," according to a note from one strategist, Bloomberg reports

5. When Hollywood wants to get a deal done, these are the bankers it turns to. Meet the 9 dealmakers dominating the media landscape, working with everyone from Warner Bros. Discovery to Brad Pitt's production company.

6. The world's population is set to start declining in the next 40 years, and that's not a good thing. While that may mean it's easier to find parking, there are some serious ramifications. Here's why

7. We've got a leaked org chart of the key people running Microsoft's cloud businessWhile I have you here, you should check out the top people running cloud projects across Wall Street, and the key Big Tech execs banks and hedge funds might try and poach

8. Real-estate investors are looking to score discounts by buying up Florida properties hit by Hurricane Ian. "If they were asking $1 million before the storm, I'll offer $750,000," said one potential buyer.

9. The Gang Hates Tesla. "It's Always Sunny in Philadelphia" star Glenn Howerton said his Tesla was stuck in a parking garage for over 24 hours after his key fob broke, sending Howerton "into a rage."

10. Thinking about getting testosterone replacement therapy? Read this first. This 42-year-old man shares his thoughts on the pros and cons of getting on the juice.


Keep updated with the latest business news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief. Listen here.


Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London. 

 

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