The CIC invested $3 billion for a 9.9% stake in Blackstone right before the private equity firm's 2007 IPO, only to see the value of its stake get crushed as the credit crisis set in and large LBO activity ground to a halt. CIC later increased its stake to 12.5%. Shares of Blackstone closed at $11.31 on Thursday, off more than 60% from their IPO price of $31. CIC’s investments into Blackstone Group indicate that the group will not fall short of capital for diversification.
Goldman Sachs (NYSE:GS) best-in-class franchise and market position keeping it strong
GS stock has gained 20.2% moving up from $119.4 the closing price on April 3 to $143.49, the closing price on July 3. The stock’s current price is significantly up (202.7%) from its 52 week low price of $47.41. However, it is still significantly below (24.5% down) its 52 week high price of $190.04. I do expect the stock to go past its 52 week high price of $190 by end 2009. This amounts to a decent return of 88.9% over 12 month period. I am bullish on the stock for the following reasons.
Growing market share should bolster Goldman Sachs Group Inc.'s revenue for the remainder of 2009 and into 2010. The bank has been better able than its competitors to take advantage of dislocation in the market to add market share. That should provide a boost to the bank's trading revenue and offset any slowdowns that might be seen in trading later in the year. As the credit markets have begun to recover during the first half of 2009, investment divisions of banks have seen a sharp increase fixed income trading compared with the second half of last year, when markets were essentially shut down by the growing credit crisis. So, going forward, higher market share should translate into higher profits for this bank.
JP Morgan (NYSE:JPM)
JPM stock has gained just 10.2% moving up from $29.28 the closing price on April 3 to $32.27, the closing price on July 3. The stock’s current price is significantly up (115.7%) from its 52 week low price of $14.96. However, it is still significantly below (36.3% down) its 52 week high price of $50.63. Though, the stock is not expected to break the 52 week high price of $50.63 soon, I do expect the stock to go past $45 by end 2009. This amounts to a decent return of 51% over 12 month period. I am bullish on the stock for the following reasons.
JPM was the world's top underwriter of stocks and bonds in the second quarter and first half of 2009. Global equity issuance more than tripled in the second quarter from the first quarter. JPMorgan arranged $188.2 billion of offerings in the second quarter, for a 10.5 percent market share.
