Blackstone was all the hype last week as the IPO priced at $31, shot up above $37 and then quickly tumbled to close below $30 the past couple of days.
What does this mean?
Well, the stock is new and many amateur investors probably got slammed the first couple of days with 20% paper losses but that shouldn’t scare longer term investors.
Take a page out of the lesson book of Google (GOOG) and study how that stock also dropped quickly in the days after the IPO debut. The stock reached a height of $113.48 before dropping back below $98 eight trading days later.
Volume dried up as the stock retreated prior to the first major up-trend which blasted the stock above $140 within a month. History can tell the rest of the story as the stock now trades above $525 per share but that is not the point.
I am not saying that BX will be the next GOOG but it can give you some comfort that GOOG did drop and pause prior to making a run.
Volume has been drying during the recent drop in BX so only time will tell if the stock can start its first true up-trend.
FYI: Keep an eye on the new legislation proposed by congress as it may affect the stock (BX) in the coming weeks and months.
I don’t have a true trend-trading rating on Blackstone but I would lean towards “Buy” over the longer term!
Don’t we all wish that we bought GOOG @ $100. 🙂 Are you going to dabble with BX?
I’m looking for some kind of snap back rally in BX next week.. maybe something similar to what happened with Limelight Networks (LLNW) today.. wow! what a move at the end of the day.
IMO- this is one way (very short-term) to trade the Blackstone aka BX IPO.
There is an SEC law the prohibits analyst coverage of new issues for at least thirty days. After these thirty days the analyst community can upgrade and downgrade the issues, this is where you and I can profit. Let’s look at how this scenario could have helped us in Fortress Investment Group’s situation.
FIG came public on Feb 9th. During this time, it fell from $30.87, first day’s closing price, to about 26.7 on March 20th. On March 21st, Wall Street analysts upgraded FIG to “buy” across the board and we saw the stock pop and close at 28.41, a 6% gain. Had an investor known how Wall Street’s analyst community worked, they would have been able to profit handsomely.
I’m quite sure we will see a similar trade opportunity arise for Blackstone. Even if you haven’t read their SEC filings, you know it has lots of potential growth. Blackstone has had an IRR of 25-30% for about 20 years, gets away w/out paying taxes at 35% for 5 years, and after 30 days of them being public, expect analysts to upgrade ‘BX’ to a “buy”.
Just my two cents.
Same with IBKR, though it’s past a month and no gains yet. BX looks good now though.