3 Ways to Play the M&A Wave

Complex strategies like merger arbitrage can lead to nice returns

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Blackstone Group

Blackstone185 3 Ways to Play the M&A WaveOK, so Blackstone Group (BX) isn’t a mutual fund or ETF, but as a private equity firm, it’s still a great way to get into the M&A game.

Private equity firms purchase companies — usually ones with lots of debt — then make money by selling them again or putting them back on the public market via initial offerings. So, for those investors who want a higher return than arbitrage, a private equity firm could be a preferable alternative.

Blackstone is the leading player in its space with a whopping $218 billion in assets under management. In the past two years alone, it has raised $96 billion. More importantly, BX has been generating nice returns from its portfolio, especially amid a nice comeback for the IPO market. Some of Blackstone’s more recent offerings include PBF Energy (PBF), SeaWorld (SEAS) and Pinnacle Foods (PF).

That said, Blackstone also has other sources of income, including hedge fund management and real estate investment.

While BX shares are a bit frothy at 21 times trailing 12-month earnings, it does offer a sweet dividend currently yielding 4.4%.

So, if the M&A market does rebound — and the IPO market continues its winning ways — BX could be a fantastic double-threat.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2013/06/3-ways-to-play-the-ma-wave/.

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