BlackRock, Inc. (BLK): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
BlackRock's second-quarter 2014 earnings outpaced the Zacks Consensus Estimate. Results benefited from top-line growth driven by improvement in assets under management, partly offset by higher operating expenses. We believe that steady capital deployment activities and opportunistic acquisitions will likely be accretive to its overall performance going forward. Further, the company's initiatives to improve market share in the ETF business should act in favor to boost top-line growth. However, mounting expenses, high dependence on fee-based revenues and regulatory restrictions on BlackRock's revenue sources makes us apprehensive.

Overview:

BlackRock Inc. founded in 1988 is headquartered in New York. The company is one of the world's major publicly-traded investment management firms. It offers products that span the risk spectrum, including active, enhanced and index strategies across markets and asset classes. The company offers these products through a variety of structures including separate accounts, mutual funds, iShares (ETFs) and other pooled investment vehicles.

BlackRock also offers risk management and advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions. The company is not engaged in proprietary trading or other activities, which may lead to a conflict of interest with clients.

As of Jun 30, 2014, PNC Financial Services Group Inc. held approximately 21.9% capital stake in BlackRock that included outstanding common and non-voting preferred stock.

BlackRock had approximately 11,600 employees in more than 30 countries and a strong presence in key global markets, including the U.S., Europe, Asia, Australia, Africa, and the Middle East, as of Jun 30, 2014. The company's assets under management (AUM) were $4.6 trillion as of that date.

BlackRock manages its AUM through the following categories:

Equity: BlackRock's equity AUM reflects the diversity of its business model and includes a wide range of both active and passive strategies (including the institutional index and iShares products). The AUM for this class was $2,462.6 billion as of Jun 30, 2014.

Fixed Income: BlackRock's fixed income asset class is evenly divided between passive and active mandates with 51% and 49% shares, respectively. AUM under this class as of Jun 30, 2014 was recorded at $1,340.7 billion.

Multi-Asset Class: BlackRock's multi-asset class team manages a range of personalized mandates for a diversified client base that leverages its broad investment expertise in global equities, currencies, bonds and commodities as well as its extensive risk management capabilities. As of Jun 30, 2014, AUM under this class was $374.5 billion.

Alternatives: BlackRock Alternative Investors manage the company's alternative investment efforts, including product management, business development and client service. There are two types of alternative products namely Core products (hedge funds, funds of funds and real estate offerings) and Currencies and Commodities. AUM under this class came in at $116.9 billion as of Jun 30, 2014.

Cash Management: Cash management products include taxable and tax-exempt money market funds and customized separate accounts. Portfolios may be denominated in U.S. dollar, Euro or British pound. AUM under this class came in at $268.4 billion as of Jun 30, 2014.

Advisory: Total AUM as of Jun 30, 2014, from this asset class was $30.5 billion.

In Oct 2007, BlackRock concluded the acquisition of fund of funds business of Quellos Group, LLC. The combined fund of funds platform operates as BlackRock Alternative Advisors.

In 2009, BlackRock acquired Barclays Global Investors (BGI), a wing of Barclays PLC. It remains one of the most significant deals in BlackRock's history. The cash-and-stock deal, valued at $13.5 billion, created the world's largest asset management company of that period.

In 2012, BlackRock bought Claymore Canada from Guggenheim Partners LLC to expand its exchange-traded fund (ETF) business in Canada. Moreover, the company concluded the takeover of Swiss Re Private Equity Partners (SRPEP) AG, the private equity operations arm of the fund management group, Swiss Re Ltd.

In 2013, BlackRock completed the acquisition of Credit Suisse's ETF business. The acquisition complements the existing iShares ETF range with funds domiciled in Switzerland, Ireland and Luxembourg. Later in the same year, the company completed the acquisition of MGPA, an independent private-equity property investment advisory firm in the Asia Pacific and Europe.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: BGI , ETF , BLK

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