Recent private equity IPO Blackstone (NYSE: BX) cannot get its shares to move up for love or money. That may be because the company is not as well run as people may think.
It now appears that Blackstone's investment in Financial Guaranty Insurance Corp. is in trouble. According to The Wall Street Journal, "Like other bond insurers that guarantee interest and payment in the event of default, FGIC is under scrutiny by credit-ratings firms over whether it has enough capital." In other words, the company needs more money. Blackstone may have to put up $200 million in an aid package.
Over the last six months, Blackstone's shares are down over 40%. Part of that is because of investments like FGIC, and part is because the private equity business is slowing due to tight credit markets and the inability to take some of its investments public to provide liquidity.
What this boils down to is that Blackstone was really nothing special. Its IPO appeal was not based on management; it was based on an overheated private equity market. Now its management seems ordinary and its industry seems troubled.
Blackstone was never a good investment, and that becomes more apparent with each passing day.
Douglas A. McIntyre is an editor at 247wallst.com.
