Blackstone Group: Talking, Not Buying

I do think that the tax risk that we in particular face has been fully discounted in the stock price.

—Tony James, The Blackstone Group, President, COO

Companies that comment on their stock valuation generally run towards single-digit NASDAQ shooters, not NYSE-listed mega-caps—or, in the case of Blackstone Group, a company whose IPO at a total market value close to Lehman Brothers, which certainly marked the peaked of the Private Equity Bubble back in June, former mega-caps.

Which is why the Blackstone comments on its own stock valuation were so interesting.

Here is the context and the full quote from Mr. James, courtesy of the indispensible StreetEvents:

Just a word on taxes and Washington, DC, because I am sure I will get that question too. I don’t think there has been any real change since we talked last quarter. The taxation of most publicly-traded partnerships and carried interest continues to be actively debated. There is no consensus that has emerged and it is really not predictable as to what ultimately will happen in the areas of particular interest to us, because there are powerful forces on both sides of this issue.

It is clear, I think, in general that taxes are going to go up and our goal remains just to see that we are treated consistently and fairly with other people. I do think that the tax risk that we in particular face has been fully discounted in the stock price [emphasis added].

How, precisely, would he or anybody else know exactly what has been discounted in the stock price of Blackstone?

More importantly, assuming he is correct, then why isn’t he buying?

Jeff Matthews I Am Not Making This Up © 2007 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, nor is it a solicitation of business in any way. It is intended solely for the entertainment of the reader, and the author.