Thursday, June 28, 2007

Blackstone IPO: Hype is gone, now go buy it!

Blackstone (BX) IPOed at $33/share last Friday, and quickly went up to a high of $38 before plunging to today's close price of $29.69.

While the fall has been consistent, I think it is about to hit the bottom and will start to go back up by next week.

I attribute much of the fall to the over-hyped nature of this IPO. People were scrambling to get in on this deal, reminiscent of Internet bubble days when IPOs were pounced upon, regardless of the company or the product. Once the shares began to be traded, rational thinking entered the market, and investors began to question rather Blackstone is worth such a high premium.

To be fair, Blackstone is not a random Internet company. It has been around for years and has been a very successful investment firm. It is for that reason that I believe the turnaround is about to occur. I believe the stock was overvalued by about 10-15%, and so I think a good range to buy in is $27-$30.

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