Analyst Note| Greggory Warren, CFA |
While there was little in narrow-moat Blackstone's third-quarter results that would alter our long-term view of the firm, we are increasing our fair value estimate to $120 per share from $115 to account for improvements in our near- to medium-term forecasts since our last update. Blackstone closed out the September quarter with $528.4 billion in fee-earning AUM, up 5.9% sequentially and 18.9% on a year-over-year basis (and higher than our forecast of $521.1 billion). Adjusted net inflows of $22.1 billion during the quarter were higher than out forecast for $13.1 billion as the company put more capital to work than we were anticipating. This sets the company up well to close out the year with organic fee-earning AUM growth in the low double digits (well above our forecast for average annual organic long-term AUM growth of 4%-6%). The bulk of the inflows were driven by Blackstone's real estate ($8.5 billion) and credit and insurance ($8.3 billion) segments, with most of the remainder coming from its private equity platform ($4.9 billion).