Blackstone, the largest manager of alternative assets such as private equity and real estate, on Thursday reported a 20 percent drop in first-quarter earnings per share but still beat Wall Street's expectations, as a stock market slump weighed on the value of its holdings.
Profits have soared at private-equity firms such as Blackstone in recent years, as a U.S. stock market rally allowed them to sell assets for top dollar. That rally came to an end in the first quarter, amid a trade dispute between the world's two largest economies, the United States and China.
Blackstone posted economic net income per share of 65 cents in the first quarter, down from 81 cents a year earlier. Analysts, on average, expected 45 cents, according to Thomson Reuters I/B/E/S.
Economic net income, a closely watched earnings metric for U.S. private equity firms, reflects the mark-to-market valuation of gains or losses on Blackstone's portfolio.
New York-based Blackstone also said it plans to pay a 30 cent special dividend in 2018, returning to shareholders a portion of the proceeds from the conclusion of its partnership with FS Investment. The firm increased its share buyback authorization to $1 billion from $335.8 million.
Blackstone's shares were up 1.2 percent pre-market on Thursday morning.
Stock market swings affect private equity firms because they often have large public market holdings in investments that they are the process of exiting. Public markets are also used as a measuring stick when valuing private investments.
The benchmark S&P 500 index slid 1.2 percent in the first three months of the year, the index's first quarterly fall in two-and-a-half years.
Principal investment income at Blackstone's private equity unit, one of four divisions alongside real estate, credit and hedge fund investing, fell 42 percent year on year in the quarter.
New York-based Blackstone's assets totaled $449.6 billion at the end of March, up from $434 billion at year-end 2017.
In January, Blackstone agreed to buy a majority stake in the financial and risk business of Thomson Reuters, the parent company of Reuters News, in a $20 billion deal. Reuters News will remain part of Thomson Reuters.