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BlackRock (NYSE:BLK) is one of the most successful investment companies in the world, closely tied to its billionaire CEO, Larry Fink, a passionate investor across multiple industries. Quarterly earnings are always a chance to hear from Fink and discover where he sees opportunities. BlackRock is a perennial favorite among dividend investors. While its forward dividend yield is a modest 2.46% due to its high stock price, its annual dividend is $20.40, and the stock price has outperformed over the last five years.
Before its earnings call, BlackRock made headlines for having to remove an ad where Thomas Crooks, the gunman who shot at Trump, featured in the background. Larry Fink opened the BlackRock earnings call with an expression of civility and unity after the shooting.
The BlackRock success story hinges on more individual and institutional investors working with the company. The company reported $4.8 billion in revenue and earnings per share of $10.36, which beat expectations. BlackRock’s quarterly inflows came in at $82 billion. The company has an astounding $10.6 trillion in assets under management, up $1.2 trillion year over year. This, as well as higher performance fees, boosted revenue by 8% year over year.
ETFs remain a big business for BlackRock. The company reported total net inflows of $139 billion during the first half of the year, its biggest start to the year yet. This is another sign that these investment instruments strongly resonate with today’s investors.
A Growing Focus On Private Markets And Green Energy
While BlackRock isn’t taking its foot off the gas regarding its iShares ETF juggernaut, it appears to be increasing its attention to opportunities available in private markets. This move should interest investors who see opportunities beyond the public exchanges.
BlackRock’s previously announced acquisition of Prequin will give the company access to a wide variety of private asset data, which it can use to inform many of its products and services. Martin Small, BlackRock’s Chief Financial Officer, defined the opportunity on the earnings call, saying, “What the creation of public benchmarks did to drive stock markets, especially visible through iShares, we believe the combination of BlackRock and pre-Qin can do for private markets.”
Another acquisition in the offing is the closing of the deal with Global Infrastructure Partners, a major infrastructure investor. The company estimates that once closed, this acquisition will double its private base fees and add an estimated $100 billion boost to its infrastructure assets under management.
As Fink said on the call, the ongoing boom in the generative AI space is only sustainable with robust investment in data infrastructure. Fink has long been known for his focus on investing in energy transition. He sees a significant opportunity in the intersection between the energy demand caused by AI and the need for decarbonization and renewable energy. Last month, one of BlackRock’s infrastructure funds took a controlling stake in Mainova Webhouse, an initiative to build hyperscale data centers powered by renewable energy in Frankfurt, Germany. In April this year, BlackRock and Singapore-based investment firm Temasek raised $1.4 billion for a late-stage venture capital fund targeting companies focused on decarbonization initiatives.
Fink’s enthusiasm for data centers may also be good news for those invested in publicly traded data center REITs like Equinix (NASDAQ:EQIX) and Digital Realty Trust (NYSE:DLR). On the earnings call, Fink said, “I believe this is going to be one of the world’s biggest growth engines as we start trying to develop AI for everyone. AI not just for the big powerful organization, but AI utilization for everybody, for every country in the world.”
Larry Fink is also far more positive about crypto than in the past, partly due to the iShares Bitcoin Trust (IBIT) demand. Fink told CNBC’s Jim Cramer that while he was once a skeptic, he has changed his mind, calling Bitcoin “a legitimate financial instrument that allows you to maybe have uncorrelated, non-correlated type of returns.” Given Bitcoin’s massive energy footprint soars whenever Bitcoin’s valuation spikes, it wouldn’t be surprising to see his attention turn toward solving that problem as well.
What we can take away from BlackRock’s call is that investing opportunities include tried-and-true investments like ETFs and increasing interest in and appetite for other debt and credit instruments. Fink’s vision for the future includes a scenario where fixed-income investors come off the sidelines and invest more in private credit and infrastructure debt.
This article Where Billionaire Larry Fink Feels The Next Big Opportunity Is For Investors originally appeared on Benzinga.com
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