BlackRock Sees 'Huge Reservoir Of Money' Waiting
The stock of investment management firm BlackRock ( BLK ) began building a base in April.
The stock declined 23% as it formed a cup-with-handle base. The potential buy point is 192.09.
The pattern is first stage, which is good. Yet, the stock has shaped a series of first-stage bases since 2010 without any breakout going far.
Are things about to change?
If they are, that might be good news for the market, at least as far as a risk-on condition goes.
BlackRock's chief financial officer, Ann Marie Petach, said at the earnings call Oct. 17 that investor confidence and the market tone "improved materially" in Q3. About $22 billion shifted into BlackRock equity products.
"The preference for equities represents a major shift in sentiment from the fixed-income bias we were seeing across the platform in prior quarters," Petach said.
She added that in Q3 retail investors "still favored fixed income."
Some market watchers regard retail as the dumb money. They say retail investors have a history of being late or out of synch.
BlackRock's EPS grew 23% in Q3, the best growth in five quarters. Revenue rose 4%, not much but still the highest in four quarters.
The Street expects EPS to grow 20% in Q4 on a sales gain of 11.5%.
BlackRock sees an additional change in the economic climate that may or may not be good.
CEO Laurence Douglas Fink said at the call, "I do believe we're going to still be in an era of uncertainty, of volatility, and we're going to be in an era where politics will intersect with economics. And this is a very large change that we've witnessed in many other markets."
On Monday, BlackRock took out ads in newspapers warning of a U.S. budget crisis. Fink said "a huge reservoir of money" is waiting to come off the sidelines if a fix is reached and if confidence improves.
BlackRock manages the family of exchange traded funds called iShares. BlackRock bought iShares from Barclays in 2009.
BlackRock's annualized dividend yield is 3.1%. The company has more than doubled the payout since 2007, increasing the dividend in eight of the past nine years. The dividend was unchanged in 2009.