The Blackstone Group

The Blackstone Group | Kailix Advisors

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Formed in 2006, Blackstone Kailix Advisors invests primarily in equity investments on a long and short basis and is the hedge fund arm of The Blackstone Group. According to Blackstone.com AUM was approximately $2.6 billion as of June 30, 2008. The assets of TickerSpy’s top 25 holdings as of April 1st 2008 totaled over $3.6 billion. Long-term exposure is targeted at 20%-30% net long (long positions less short positions).

Manish Mittal is the fund’s Chief Investment Officer as well as a Senior Managing Director of The Blackstone Group. Kenneth Miller is the head trader and Vito Tanzi is the Chief Financial Officer. Kenneth Miller was a trader at SAC Capital Advisors under Manish Mittal before joining in 2006. The background of both Mr. Miller and Mr. Mittal focus on equity investments, while also branching out into derivatives and commodities.

Resource #1: (3.4.09) The Blackstone Group wrote down the value of four out of five private equity funds it manages, according to a letter to investor.

The New York-based p.e. giant, which reported a fourth-quarter loss of $827.1 million last week, did no better by its clients than it did by its investors. Three of the five funds covered by the letter posted double-digit losses last year, Reuters reports, while just one enjoyed a positive return. All told, Blackstone wrote down the value of its p.e. portfolio by 20% in the fourth quarter alone, and 31% on the year. source

Resource #2: State-owned company China National Chemical Corporation (ChemChina) and hedge fund manager the Blackstone Group announced the closing of Blackstone’s investment in ChemChina subsidiary, China National Bluestar Corporation.
Bluestar has also completed its group restructuring and has registered as a Sino-foreign joint stock limited company. Blackstone will invest up to $600 million in Bluestar for a 20% stake. Two Senior Managing Directors of Blackstone, Antony Leung and Ben Jenkins, will join the board of Bluestar.

Headquartered in Beijing, ChemChina was founded in 2004, and administrated by the State-owned Assets Supervision and Administration Commission of the State Council of China. Through fast growth in the last 4 years, ChemChina is now a large group corporation with both asset value and revenue exceeding RMB100 billion ($14.6 billion). ChemChina is ranked 35th among China’s top 500 corporations, according to National Bureau of Statistics of China.

The Blackstone Group’s alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds.

Resource #3: Blackstone’s Kailix Advisors portfolio’s top 15 long equity holdings and changes in
holdings according to TickerSpy.com are as follows and were updated April 1st, 2008:

*Position percentages represents share of AUM. Leverage and short proceeds skew the following holdings as of a percent of total holdings and are not accounted for.

New Positions:

Alpha Natural Resources (ANR) = 2,600,000 shares / 4.90% of portfolio
Allegheny Technologies (ATI) = 1,200,000 / 2.38%
Fording Canadian Coal Trust (FDG) = 1,200,000 / 2.51%
Lorillard Inc (LO) = 1,700,000 / 3.33%
The Mosaic Company (MOS) = 950,000 / 3.42%
Potash Corp (POT) = 800,000 / 4.45%
SPDR Trust (SPY) = 1,700,000 / 6.41%

Existing Positions (No Change):

Allied Waste Industries (AW) = 47,900,000 shares / 16.67% of portfolio
Orbitz Worldside (OWW) = 46,000,000 / 9.02%
TRW Automotive Holdings (TRW) = 46,100,000 / 30.25%

Existing Positions (Increases):

Rockwood Holdings (ROC) = 2,900,000 shares / 2.92% of portfolio
Weyerhaeuser Co (WY) = 1,800,000 / 3.04%

Existing Positions (Decreases):

Alliance Data Systems (ADS) = 2,500,000 shares / 5.30% of portfolio
BHP Billiton Limited (BHP) = 1,600,000 / 5.28%
Precision Castparts (PCP) = 1,000,000 / 4.37%

Analysis of New Positions:
71% of new positions back in April consisted of equities concentrated on commodities. Basic Material and Energy Sector stocks made up 5 of the 7 top new holdings for Kailix Advisors. The SPDR trust was another big position, in essence betting on a positive S&P 500 movement.

by Guest Contributor Anthony Zipparro

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