BlackRock outperforms performance and makes major acquisitions

The world’s largest asset manager grows in size with: black stone (NYSE:BLK) grew its assets under management (AUM) 10% in the fourth quarter, pushing AUM past $10 trillion. During the year, the company’s total assets increased by 16%.

But BlackRock also grew by acquiring Global Infrastructure Partners, an investment firm with $100 billion in assets focused on private market infrastructure. BlackRock paid $3 billion and 12 million shares of its own stock for the company.

BlackRock also on Wednesday became one of the first 11 companies to receive approval to launch iShares Bitcoin Trust (NASDAQ:IBIT), a spot Bitcoin exchange-traded product. On Friday, the company also reported fourth-quarter and full-year results that topped expectations. Let’s recap a busy week for BlackRock.

infrastructure investment

During the fourth quarter, BlackRock’s revenue rose 7% year-over-year to $4.6 billion, while earnings rose 9% to $1.4 billion, or $9.15 per share. Both figures beat analysts’ estimates.

Net inflows into the company’s coffers amounted to $96 billion in the quarter, down 16% from a year ago. BlackRock recorded net outflows of $9 billion from retail mutual funds and $16 billion from institutional accounts last quarter. However, $88 billion flowed into exchange traded funds (ETFs) and $33 billion flowed into cash management products such as money market funds.

For the full year, BlackRock’s net inflows were $289 billion, down slightly from $307 billion in 2022. As previously mentioned, AUM also improved, increasing 16% to $10 trillion, driven primarily by rising asset levels due to market appreciation. BlackRock’s revenue was $17.9 billion, flat from the same quarter last year, and net income was up 6% to $5.5 billion, or $36.51 per share. Costs increased slightly to $3 billion in the third quarter from $2.9 billion in the third quarter.

The GIP acquisition makes BlackRock the second-largest manager of private markets infrastructure with $150 billion in AUM. Chairman and CEO Laurence Fink sees significant growth potential in this $1 trillion market with global demand for digital infrastructure such as broadband, cell towers and data centers. Transportation hubs such as airports, railways, and shipping ports; Both decarbonization and energy security are on the rise.

“Infrastructure is one of the most exciting long-term investment opportunities,” Fink said in a statement. “Many structural changes are reshaping the global economy.” “We believe that the expansion of both physical and digital infrastructure will continue to accelerate as governments prioritize self-sufficiency and security through increased domestic industrial capacity, energy independence, and onshore or near-shore deployment of key sectors. “Policymakers are just beginning to implement once-in-a-generation financial incentives for new infrastructure technologies and projects.”

Layoffs and restructuring

Earlier this week, Fink informed employees that the company would lay off 3% of its workforce, or about 600 employees, as part of a restructuring plan. Fink and BlackRock President Rob Kapito said the layoffs were intended to adapt to changing industry conditions and that new jobs would be added in higher-growth areas, according to Business Insider, which reviewed and published an internal memo announcing the layoffs.

BlackRock executives expect the company to have more staff by the end of 2024 and to add staff in areas where it expects growth, including ETFs, new technologies and international markets. Fink commented on this restructuring in his fourth quarter earnings report, saying, “We will simplify and improve the way we work and serve our customers through a strategic reorganization of our organization.”

BlackRock didn’t provide guidance in its earnings report, but its stock prices are fairly cyclical and tied to market movements. However, the company has an advantage over its competitors due to its size, product breadth, and leadership in the ETF space.

As mentioned earlier, we launched a new spot Bitcoin ETF, one of 11 ETFs on the market. The GIP acquisition will also help BlackRock further diversify its revenue streams.

The company’s stock price was largely unaffected by Friday’s earnings, falling about 0.4% in morning trading to about $790 per share. BlackRock’s forward price-to-earnings (P/E) ratio is 21. There may be some volatility this year, but its market power makes BlackRock generally worth considering as a long-term holding.