BlackRock stock: Why the money manager is worth a bet now

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by Florian Hielscher, Euro on Sunday

When BlackRock boss Laurence Fink looks at the year to date on the stock markets, he finds little that is positive. “The first half of 2022 brought an investment environment the likes of which we haven’t seen in decades. Investors are grappling simultaneously with high inflation, rising interest rates and the worst start to the year for stocks and bonds in half a century, with global equities – and bond indices have fallen by 20 and ten percent, respectively,” says Fink.

The numbers of the world’s largest asset manager were therefore awaited with great excitement. The bottom line: the global turmoil on the markets had a noticeable impact on business, and investors withdrew their capital from riskier asset classes. Laurence “Larry” Fink and his co-founder saw an 11 percent decline in assets under management (AUM) for the second quarter. However, at $8.49 trillion, BlackRock remains a behemoth. At the end of 2021, customers had put ten trillion dollars into his hands.

Both poor market sentiment and capital outflows weighed on the result. The wealth manager reported a 6 percent decline in revenue from the prior-year quarter, and adjusted earnings per share of $7.36 were 30 percent lower than a year ago. One reason: The value of the managed portfolios has recently fallen significantly, so BlackRock earned less from the management fees.

Among other things, the company is involved in all DAX companies, in some even the largest shareholder. Since the beginning of the year, the leading German index has lost a lot 16 Percent. Nevertheless, the Americans again collected enormous sums of money. “BlackRock delivered $90 billion in net inflows in the second quarter, further demonstrating our ability to deliver industry-leading organic growth in even the most challenging conditions,” said Fink. 52 billion alone flowed into the ETFs of the house brand iShares.

Growth area Aladdin

One bright spot was the technology services business. BlackRock makes its risk and investment platform Aladdin available to competitors, insurers or banks. Unlike the Disney street thief of the same name, the platform enriches its users: The gigantic data analysis system is used, for example, to carry out risk assessments for portfolio management.

According to BlackRock, the platform manages $14 trillion from more than 160 clients. Although technology services contributed a manageable share of sales at seven percent, boss Larry Fink announced a record number of customer mandates for Aladdin.

The group is also very solid because of its sheer size. The stock’s huge fixed assets and broad lineup make it an attractive bet on a market-wide recovery. Even if Fink currently has little positive to say about the market, shareholders can be happy: BlackRock announced an unchanged quarterly dividend of $4.88 per share.

Chance: The market position is strong, the valuation moderate. Those who rely on recovery use the current price weakness to buy.

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Image Credits: Andrew Burton/Getty Images