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China Gets Blackstoned (BX)

by Joseph Hargett (jhargett@sir-inc.com) 7/30/2007 2:53 PM

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Since Blackstone (BX: sentiment, chart, options) went public in one of the most publicized initial public offerings this year, the shares have plunged more than 21%. In the meantime, many have speculated that this IPO marked the end of the current bull market. None have felt the impact of this decline more than China. The country bought a 10% stake in BX at a 4.5% discount during the company's IPO. During the ensuing 24 trading days, China has seen this investment fall by about 18%, or a loss of about $540 million.

While China is certainly a little embarrassed about the heavy losses, many analysts feel that the country is not all that perturbed, thinking of BX as a long-term investment instead. According to Dong Tao, chief China economist for Credit Suisse in Hong Kong, "Obviously it's not the best timing but I don't think that is going to change China's strategy."

Looking at sentiment on the shares, options players are pretty bullish about the company's near-term prospects. BX's Schaeffer's put/call open interest ratio (SOIR) currently rests at 0.50, indicating that calls double puts among the front 3 months of options. However, short sellers have taken the other side of the argument, with more than 9% of the stock's total float sold short. With sentiment data still in its infancy for BX, investors should take these figures with a grain of salt.

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