Analyst Upgrades Three Alternative Investment Firms

Sep 10 2009 | 8:57am ET

For the most part a bust since their much-ballyhooed initial public offerings, a trio of publicly-traded alternative investment firms is getting a boost from the bounce-back year for hedge funds and private equity firms.

Barclays Capital upgraded Blackstone Group, Fortress Investment Group and Och-Ziff Capital Management yesterday. The former was upgraded to equal weight from underweight, and the latter two to overweight from equal weight.

“Our preference for the alternative managers is a function of discounted valuations relative to the traditional managers (even adjusted for lower fair value multiples applied to performance fees), a higher upward earnings bias of the next couple of years from meaningful performance fees coming back into the earnings stream due to stronger-than-expected year-to-date performance, and renewed inflows following the cessation of the redemption cycle,” analyst Roger Freeman wrote in a note to investors.

All three of the firms rallied following the upgrades.

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