BlackRock's third-quarter 2014 earnings surpassed the Zacks
Consensus Estimate. Results benefited from robust top-line growth
driven by improvement in assets under management and strong
inflows, partly offset by higher operating expenses. We believe
that steady capital deployment activities and opportunistic
acquisitions will likely be accretive to the company's overall
performance going forward. Further, the company's initiatives to
improve market share in the ETF business should act in its favor to
boost revenue growth. However, mounting expenses, high dependence
on fee-based revenues and regulatory restrictions on its revenue
sources make us apprehensive.
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 Sep 30, 2014, PNC Financial Services Group Inc. held
approximately 22.0% capital stake in BlackRock that included
outstanding common and non-voting preferred stock.
BlackRock had approximately 12,100 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 Sep 30, 2014. The company's assets under management (AUM) were
$4.5 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 $2,400.1 billion as of Sep
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 Sep 30, 2014 was
recorded at $1,333.5 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 Sep 30, 2014, AUM under this class
was $373.1 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 $113.7 billion as of
Sep 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 $281.0 billion as of Sep 30,
Advisory: Total AUM from this asset class was $23.2 billion as
of Sep 30, 2014.
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
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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