Blackstone Group IPO, no thanks for now
6-21-07: Blackstone Group (BX) debut is expected Friday morning on Wall Street. In light of the increasing demand, the company increased its IPO price to $31 per share. This does not mean the ordinary Joes like us will be able to get it at this price. All this means is the rich folks that are connected will be able to get at $31 per share. Once it hits the street, the price will reflect its true demand. We anticipate this stock will debut at a much higher price. Our guess is it will be in the high $50 per share coming out of the gate. Should investor jump in and attempt to take a piece of this hot pie?
No hot pie for us. Our approach is to wait for it to cool down before even attempting to buy a slice. Jumping in when the stock is this much in high demand could only lead to trouble. Fundamentally, the company appears solid. Having acquired various companies in recent years, Blackstone Group is among the more aggressive and visible private equity firms. The risk with this company is private equity firm lacks precedence. There has not been any private equity IPO that we can recall (we can be wrong), thus the market is still trying to properly value the company. Similar to early days of the Internet bubble, investors tend to overvalue sectors that are new. Nevertheless, a new issue provides investor yet another chance to participate in our great market economy. Good Luck!
