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BlackRock

The coronavirus induced sell off continues to pummel stocks worldwide. This has now been compounded by the oil price war. We are likely to have more down days. But with that said, there are bargains to be had now. One stock that I will likely buy is BlackRock Inc (BLK). BlackRock is down over 25% in the past month alone. I have written about BlackRock before in my article entitled “BlackRock’s Global Industry Leadership and Undervaluation Make It A Buy.” BlackRock’s top line and thus bottom line are sensitive to market fluctuations. This likely explains the large drop in stock price in the past month. However, it is one of my two favorite asset managers due to the company’s ability to organically gain assets under management or ‘AUM’. This is driven by market leadership in passive investing, specifically ETFs. But since BlackRock is down over 25% in the past month, the earnings multiple has compressed to about 13.3X, which is much lower than the market average and trailing 5-year average multiple of ~18X. Simultaneously, the dividend, which is seemingly safe, is now yielding ~3.5%. The company is a Dividend Contender having raised the dividend for 11 straight years. I view BlackRock as a long-term buy.

Overview of BlackRock

BlackRock, which was founded in 1988, is the world’s largest asset manager with over $7.4T in AUM at end of 2019. This is broken down into about 51% equities, 31% fixed income, 8% multi-asset class, and 7% in money market funds. The company is one of the market leaders in passive investing and about two-thirds of AUM is in passive strategies. BlackRock’s iShares ETFs are arguably the crown jewel of the company’s product line up and is the global market leader. The other important aspect of BlackRock that is less well-known is its proprietary ‘aladdin’ platform. This is a technology that combines risk analytics, portfolio management, trading execution tools, and investment operations tools…

Disclosure: I am long BLK.

Please read the complete article at my profile on Seeking Alpha. To rad about BlackRock down 25%.


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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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