One of the selling points of private equity is that its returns are not linked to the stock markets, or at least that they are somewhat independent. That was certainly true this week. Amid the bloodbath in the equity markets Monday, the stocks of two private equity fund managers were sharply up: Blackstone Group LP and Fortress Investment Group LLC.
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Blackstone closed up 3.3% at $16.44, and Fortress rose 2.3% to close at $10.30 on a day when the S&P 500 was down 4.6%. Both stocks were up again Tuesday morning, as well, when the broader markets were down, notwithstanding a report on BloggingStocks.com that American International Group Inc. might dump its 48 million Blackstone shares. (In fact, the AIG's shares are restricted so it can't sell any shares without Blackstone's approval before the end of 2009, and it can't sell more than one-third of its stake before next June, even with the company's approval.)
Evidently it pays not to have any exposure to Lehman, AIG or credit default swaps this week.
Still, both Blackstone and Fortress are well below their respective highs in August of $19.49 and $12.01. Not to mention the peaks they reached on their first days of trading last year of $38 and $37, respectively. - John E. Morris
