In a recent profile of KKR, Breakingviews.com (via the NYTimes) attempted to value the company by taking a look at Blackstone’s operations. I don’t have any comment on the analysis itself, but two excerpts stood out in my mind:
[Blackstone] didn’t do as well collecting performance fees and investment gains because its holdings have been falling in value. But if history is any guide, its investments should rebound.
…
So, although it sounds generous given the last year’s market conditions, it’s not unreasonable to assume those [illiquid assets] might gain 20 percent annually from their current valuations for the next five years.
Does anyone else shudder a little when reading sentences like these?