Are Blackstone IPOs A Sell Sign?

Yesterday, the Blackstone Group (BX) announced they may take up to eight companies public and sell five more to take advantage of the good stock market.  This caused the stock of the Blackstone Group to go up about 8% in just on e day.  Everything sounds great until we really think about this.  Aren’t these the guys that went public in 2007 right before the stock market peaked?  Aren’t these the guys that fetched the highest price the stock has ever seen on the day of the IPO?  Aren’t these guys considered the smartest guys in the room?  The answer is yes, yes, & yes.  That’s why I own them.  I didn’t buy them when they went public.  I waited until they fell.

At the time they went public, everyone wanted a piece of the company.  Everyone wanted to join them.  But, they are simply selling their stock to you.  Yes, you are a partner but they are selling shares to you and you better believe they want a good deal.

Below is the picture of BX since its IPO in 2007.  It went from the mid $30s to around $4 per share last fall.  It’s since recovered but is still 50% below the IPO price.

blackstoneSo, here they are saying they want to take up to 8 companies public that they own.  Could this be a warning sign of things to come for the equity markets?  The short answer is yes.  They aren’t taking these public tomorrow.  This will take some time to do.  Perhaps several months.  At some point, the stock market will have fully discounted the economic recovery and stocks won’t be a good deal anymore.  This will probably coincide when many of these IPOs from Blackstone are hitting the market.

These guys aren’t stupid and it’s worthing watching what they’re doing.  It’s just a red flag.

Disclosure:  I own the shares personally & for clients.

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