What we think about BlackRock (BLK)
BlackRock in Three Words: Massive Asset Manager
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Background
2024 looks like it’s shaping up to be a stock picker’s market. We’re no longer in the euphoric and SPAC-infested year of 2021, nor are we in the doom-and-gloom of the hawkish Fed of 2022.
Instead, there’s a line being drawn in the sand by the financial media’s pundits. Some of the talking heads are enthusiastically convinced that multiple reductions of the Fed Funds rate will allow for another double-digit S&P 500 gain. Others believe that reduced consumer spending, rising debt loads, and international conflicts will lead to a global recession.
So is the glass half-empty or is it half-full? And what’s an investor to do in this stock picker’s market?
My answer is to buy the company who wins in any scenario, no matter if it’s the bears or the bulls who turn out to be correct.
That’s what leads me to BlackRock.
The world’s largest asset manager oversees more than $10 trillion of capital — which it directs into stocks, bonds, money markets, infrastructure projects, and more. BlackRock’s diverse offering of multiple asset classes and its tight risk management controls make it a company who will succeed regardless of the state of the economy.
And even better, there are two intriguing catalysts on the near-term horizon. The SEC’s recent blessing of cryptocurrencies has rolled out the red carpet for BlackRock’s new Bitcoin ETF to thrive. And its recent acquisition of Global Infrastructure Partners opens a lucrative new market for its omniscient Aladdin platform to optimize.
Under the leadership of its founder Larry Fink – who’s now been at the helm for 35 years – BlackRock is sharing its 35%+ free cash flow margins with investors through generous buybacks and a rising dividend. This is an intriguing option for investors looking for a lower-risk option to play the fast-changing financial services sector.
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