Units in the management companies of The Blackstone Group and Fortress Investment Group hit all-time lows during Wednesday trading, as US markets reacted to dreary economic data including sluggish growth predictions from the Federal Reserve, dismal third quarter home sales and crude oil prices nearing the $100 per barrel mark.
Fortress reached a low of $15.68 per unit today, down more than 15 percent from its February initial public offering price of $18.50. Fortress debuted at nearly double its $18.50 IPO price on its first day of trading, and the stock was trading mostly in the $26 to $30 range until June, when Capitol Hill’s scrutiny of alternative assets intensified. Its stock began to regain value in September, when the firm cut it subprime mortgage exposure, but began falling again in expectation of and following its third quarter earnings report, which included a $38 million net loss.
Fellow publicly traded asset manager Blackstone has had similar problems on Wall Street, with ups and downs related to political scrutiny as well as third quarter losses, which in Blackstone’s case amounted to $113.2 million and stemmed largely from IPO costs. Its units reached a low of $20.40 today, off more than 34 percent from its June issue price of $31 per unit.
The tumbling stock prices are likely being closely watched by rival firm Kohlberg Kravis Roberts, which also plans to float its management company, as well Nomura, which owns a 15 percent stake in Fortress, and the Chinese government, which owns a 10 percent stake in Blackstone. Blackstone’s new low, for example, means China’s $3 billion investment in the firm has lost roughly $1 billion in value.
As they prepared to close for the Thursday Thanksgiving holiday, US markets in general were significantly down on Wednesday. At press time, the Dow Jones Industrial Average had lost more than 1 percent, as had the S&P 500, while the Nasdaq was down 0.94 percent.