BlackRock, Inc. (BLK) is one of, if not the most well-known, investment management companies in existence today. The asset management giant was founded in 1988, is based in New York City, and has grown exponentially since its founding. Subsequent to stepping out from underneath Blackstone’s (BX) shadow in 1994, it became a publicly traded company in 1998, under the guidance of famed Chairman and Chief Executive Officer Laurence D. Fink crowned as “CEO of the decade” in 2011 by Financial News, Mr. Fink has been at the head of the company throughout its public and private tenure. Suffice it to say, Fink has played a monumental role in BlackRock’s success over the past two decades, headlining its drive to become the largest money-management enterprise in the world, in terms of assets under management (AUM). In fact, BlackRock was knocking on the door of managing $4 trillion worth of assets, as of December, 2012.
Indeed, the scope of financial products and services offered by BlackRock is second to none. Institutional and individual investors all can find specific investment vehicles suitable for their style and requirements. Corporate, union, and public pension plans, insurance companies, endowments, charities, and foundations, which fall under the umbrella of institutional clients, comprised the largest weighting of BLK’s 2012 total AUM (68%). Retail and iShares accounts constitute the remaining 12% and 20%, respectively. Meantime, risk management and global advisory services are becoming an increasingly large part of its operations.
BlackRock uses various securities and strategies to manage its stable of funds. In general, the company employs a bottom-up approach to select investments, looking to isolate undervalued/overvalued positions and profit on market mispricing. Such investments include equity, fixed income, closed and open ended mutual funds, Exchange Traded Funds (ETF’s), real estate, and other alternative investments. Furthermore, BlackRock is a global entity, and not limited to conducting business solely on the domestic front. The company has a large presence across the Atlantic, as well as in the Asia/Pacific region. Undeniably, the company’s diverse products, services, and geographic exposure play a large role in client development and retention, as well as providing flexibility to hedge risk by utilizing appropriate strategies in certain market environments.
In 2009, BlackRock purchased Barclays Global Investors (BGI) to the tune of approximately $13.5 billion, solidifying the title of the world’s largest money manager. BGI has research, portfolio management groups, and client service offices around the world. Its biggest contribution to BlackRock’s investment arsenal is its highly popular exchange-traded fund (ETF) business, known as iShares. ETF’s are investment vehicles that trade in a similar fashion to equity securities, with intraday trading and low transaction fees. For the most part, they are passively managed and designed to track a specific index, commodity, sector, or style of investment. These vehicles are largely favored by the investment community for their diversification and tax benefits. At present, the iShares division offered over 500 individual ETF’s, representing nearly $670 billion AUM. To no surprise, thanks to the acquisition of iShares, BlackRock is currently the world’s largest ETF provider. Moreover, ETFs as a whole are one of the fastest growing investment products in the market today. Since their inception in 1993, total ETF values, in assets under management, have grown to just above $1.53 trillion, with BlackRock accounting for almost 44%. Indeed, ETF’s are unquestionably valuable to institutional and retail investors, and should continue to experience large capital inflows in both the short and long term. In our view, ETF’s that provide exposure to emerging markets, such as India and Asia, will likely stand out, thus further underpinning AUM growth.
At this juncture, we believe BLK is well-positioned to thrive in any type of market environment, given its wide range of products and services, as well as its coverage of the global landscape. Although the stock is currently trading around its all-time high, near $260 a share at the time of this writing, the company’s solid core business operations, various internal and external growth opportunities, and exceptional management, ought to support its potential for prolonged success. For a more detailed report on BlackRock, including long-term analysis and forecasts, subscribers should examine our full page report in The Value Line Investment Survey.
At the time of this article’s wiring, the author did not have positions in any of the companies mentioned.