Blackstone Inc, the world's largest alternative asset manager has four main segments of its investment portfolio, namely real estate, private equity, credit & insurance and multi asset investing where its hedge funds business is situated.
Blackstone has made the strategic, long-term decision to invest in insurance businesses, according to Wolfteam Ltd.'s investment analysis. Insurance businesses are essentially investments businesses, driven by the income the company derives from investing its insurance premiums. By its nature insurance premiums are stable long-term cash flows, which do not need to be redeemed for quite a long period of time. Blackstone is using the acquired hundreds of billions of insurance premiums to invest the insurance premiums in its other business lines, namely real estate, private equity, credit & insurance and multi asset investing for the long-term.
The model of investing long-term insurance premiums in other unrelated business lines was pioneered by Warren Buffett via the controlled and majority owned by him Berkshire Hathaway conglomerate of businesses spanning energy, manufacturing, insurance and other business lines under the firm Berkshire Hathaway. Berkshire Hathaway has been a huge success making Warren Buffett consistently one of the top 5 world's richest persons since the 2000s. Currently, the publicly listed Berkshire Hathaway sports a market capitalization of 984 billion USD, making it the top 7 publicly listed companies in the world, according to market capitalization.
According to Blackstone's second quarter 2024 earnings statement ASSETS UNDER MANAGEMENT
Total AUM
($ in billions)
Fee-Earning AUM
($ in billions)
Perpetual Capital AUM
($ in billions)
Private EquityReal Estate Credit & Insurance Multi-Asset Investing
▪ Total AUM increased to $1,076.4 billion, up 7% year-over-year, with $39.4 billion of inflows in the quarter
and $151.5 billion over the LTM.
▪ Fee-Earning AUM of $808.7 billion was up 11% year-over-year, with $53.0 billion of inflows in the quarter
and $151.5 billion over the LTM.
▪ Perpetual Capital AUM reached $418.6 billion, up 9% year-over-year.
The perpetual capital from insurance premiums reached 418.6 billion USD or 40 % of Blackstone's total assets under management of 1.0764 trillion USD. The stable premiums of insurance helped to a large extent Blackstone reach 10.3 billion USD of revenue and net income of 2.0 billion USD in the second quarter of 2024:
$ in thousands, except per share data) (unaudited) 2Q'23 2Q'24 2Q'23 YTD 2Q'24 YTD 2Q'23 LTM 2Q'24 LTM
Revenues
Management and Advisory Fees, Net 1,709,370$ 1,787,313$ 3,367,685$ 3,514,461$ 6,633,877$ 6,818,036$
Incentive Fees 153,077 188,299 295,953 367,640 616,993 766,858
Performance Allocations 616,479 653,870 504,161 1,752,330 405,208 1,780,342
Principal Investments 218,924 42,269 (164,435) 582,489 (1,001,693) 447,593
Interest and Dividend Revenue 148,505 104,999 238,990 202,838 394,042 480,345
Other (31,664) 19,631 (45,818) 64,451 (89,718) 17,340
Total Revenues 2,814,691$ 2,796,381$ 4,196,536$ 6,484,209$ 6,958,709$ 10,310,514$
Expenses
Compensation and Benefits 1,060,595 1,206,202 1,823,706 2,514,506 3,088,003 4,003,770
General, Administrative and Other 275,034 311,928 548,428 681,878 1,111,137 1,250,755
Interest Expense 108,096 108,616 212,537 216,819 393,373 436,150
Fund Expenses 31,585 5,960 79,984 9,910 104,032 48,913
Total Expenses 1,475,310$ 1,632,706$ 2,664,655$ 3,423,113$ 4,696,545$ 5,739,588$
Other Income (Loss) 87,595$ 44,934$ 153,451$ 27,167$ 123,294$ (210,281)$
Income Before Provision for Taxes 1,426,976$ 1,208,609$ 1,685,332$ 3,088,263$ 2,385,458$ 4,360,645$
Provision for Taxes 223,269 260,246 270,944 543,917 224,029 786,434
Net Income 1,203,707$ 948,363$ 1,414,388$ 2,544,346$ 2,161,429$ 3,574,211$
Redeemable NCI in Consolidated Entities 17,688 258 10,988 (39,411) (162,829) (295,917)
Non-Redeemable NCI in Consolidated Entities 584,745 503,691 716,314 1,291,957 1,077,022 1,874,534
Net Income Attributable to Blackstone Inc. (''BX'') 601,274$ 444,414$ 687,086$ 1,291,800$ 1,247,236$ 1,995,594$
Net Income Per Share of Common Stock, Basic 0.79$ 0.58$ 0.91$ 1.69$ 1.67$ 2.62$
Net Income Per Share of Common Stock, Diluted 0.79$ 0.58$ 0.91$ 1.69$ 1.67$ 2.62
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