Blackstone Joins S&P 500 Index, Potential Trend Ahead
Blackstone, the leading manager of alternative assets, is set to join the S&P 500 index this month. This move could mark the beginning of a trend, according to Wells Fargo. The announcement came from S&P Dow Jones Indices after the market's closing on Friday, revealing that Blackstone (ticker: BX) will replace Lincoln National (LNC) in the prestigious index, effective September 18.
This development is being seen as "an immediate boon" for Blackstone, expanding its investor base significantly, wrote Wells Fargo analyst Finian O’Shea in a recent report. As a result, Blackstone's stock has already experienced a 3.6% increase to $108.25 after Tuesday's market opening.
O’Shea further highlighted that based on market capitalization, KKR (KKR) and Apollo Global Management (APO) are the most likely candidates for future alternative additions to the S&P 500. Currently, Blackstone has a market cap of around $127 billion, while KKR and Apollo have market caps of approximately $53 billion and $49 billion respectively.
The analyst also suggested that there may be further demotions of financial companies with low market capitalization in the future. For instance, Lincoln National's market cap is only about $4.5 billion.
Additionally, the inclusion of Blackstone in the S&P 500 demonstrates that complex ownership structures, which grant control to CEOs, do not serve as a barrier to entry. In this case, Blackstone's CEO and founder Steve Schwarzman holds preferred shares, owning approximately 19% of the company, according to 2022 filings. KKR also has a similar ownership structure.
O’Shea has given Blackstone, Apollo, and KKR stocks an Overweight rating, with respective price targets of $118, $95, and $70.
On Tuesday, Apollo's stock increased by 2% to trade at $87.93, while KKR's stock rose by 0.1% to $62.30.
- Karishma Vanjani
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