When you have more money than God, the thrill of bargain hunting doesn’t lose its touch.
That’s the case at Blackstone, the world’s biggest alternative asset manager, which said Thursday that it plans to turn the current stock market slide, where tech companies have felt the wrath of selloffs, into a discount fever dream.
One Market’s Trash is a Financier’s Treasure
After pulsing with currents last year, technology stocks have short-circuited like the stereo on an old Subaru to start 2022. The Nasdaq 100, the most tech-heavy major stock exchange, has fallen 14% and the WisdomTree Cloud exchange-traded fund, which tracks major cloud computing companies, is down 21%. Many well-known tech firms have fared even worse: Netflix is down 40%, and The Trade Desk, Cloudflare, and Twitter have all lost over 25%.
Blackstone’s core strategy makes this scenario look like a candy store. The firm prefers to stay away from cyclical businesses that high inflation could weigh on. Instead, Blackstone prefers technology and life sciences companies because of their high growth potential. This paid off in spades during the last two years of record valuations and, as a result, Blackstone is sitting on a gigantic pile of cash and looking out at a sea of potential bargains:
- In the fourth quarter of 2021, Blackstone took advantage of market highs and sold $21 billion in assets, producing a record $5.8 billion profit that was 80% higher than one year earlier.
- Blackstone ended 2021 with a record war chest of $881 billion — 42% bigger than at the end of 2020 — which it could use to snap up bargain-priced tech firms.
“In technology, in particular, a lot of the megatrends are continuing,” Blackstone president Jonathan Gray told the Financial Times. “It’s not like ecommerce, education technology, advertising tech, cyber security and the migration to the cloud are stopping.”
$1 Billion Bet: Blackstone’s not the only firm looking at tech’s bear month with dollar signs in its eyes. Billionaire investor Bill Ackman said this week that his hedge fund has acquired 3.1 million shares of Netflix, worth about $1 billion.