Blackrock Inc.BLK

Morningstar Rating

Stock Research and Analysis

by Greggory Warren, CFA

BlackRock capped off its 10-year anniversary as a publicly traded firm by closing its purchase of Barclays Global Investors (BGI) BCS, catapulting the firm into the top spot among asset managers with more that $3.2 trillion in assets under management Read more

Bulls Say

BlackRock's acquisition of BGI has turned the firm into the largest asset manager in the world, with more than $3.2 trillion in AUM and clients situated in more than 60 countries around the globe.

The diversity of BlackRock's products, along with its heavier concentration in the institutional channel, provides the firm with a stickier set of assets, allowing it to hold on to more of its AUM during market downturns.

BlackRock's purchase of BGI expanded the reach of its global operations, providing it with access to markets with greater growth potential, like the Middle East and the Pacific Rim.

The firm's three largest shareholders--Barclays, Bank of America/Merrill Lynch, and PNC Financial--have large retail client bases that BlackRock could tap into with its passive investment strategies. Read more

Bears Say

With relatively little overlap between the two firms, its will be difficult for BlackRock to wring significant costs savings out of its integration of BGI, putting even more onus on its ability to expand the business.

BlackRock's heavier concentration of business with institutional clients, who prefer to limit their exposure to any one manager, could have an impact on its AUM, should customers reallocate assets in response to the BGI acquisition.

The purchase of BGI increased BlackRock's equity/hybrid AUM by more than threefold, with the majority of these assets passively managed and producing lower management fees than its active strategies.

BlackRock's ability to expand iShares through defined-benefit plans will require additional effort, as most 401(k) plans are not set up to offer ETFs, which trade like stocks and require access to a brokerage account. Read more

Strategy

BlackRock has not shied away from acquisitions--like State Street Research (2005), Merrill Lynch Investment Management (2006), and Quellos (2007)--to expand its asset-management business. The firm's Read more

Management

The acquisition of BGI could improve BlackRock's corporate governance by further spreading out the ownership of the company's equity. With Barclays agreeing to take 38 million shares of common and preferred stock and BlackRock selling another 20 million Read more

Profile

BlackRock's acquisition of BGI has turned it into the world's largest asset manager, with more than $3.2 trillion in AUM. The combined firms will offer both passive and Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

How Dodge & Cox Looks at Financials
Watch more