Blackstone’s Jonathan Gray says the private equity giant likes the travel, sustainability, and housing sectors amid the economic reopening

Jonathan Gray
Jonathan Gray, Blackstone President and Chief Operating Officer, at the CNBC Institutional Investor Delivering Alpha conference July 18th in NYC.

  • Blackstone President Jonathan Gray says he likes the travel, sustainability, and housing sectors as the economy restarts.
  • Blackstone has focused on “thematic investing” in recent quarters and found great success.
  • The private equity firm beat analyst estimates for earnings and segment revenue in Q1 while AUM reached $649 billion.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

In an interview with Bloomberg’s Sonali Basak on Thursday, Blackstone’s President and Chief Operating Officer Jonathan Gray said his firm invested in the travel, sustainability, and housing sectors amid the economic reopening and is “excited” about the sectors’ potential moving forward.

Gray added that Blackstone has moved toward “thematic investing” during the pandemic due to the transformation of the US economy by technology and said the firm plans to continue the strategy in 2021.

“In an environment that’s being transformed by technology, how can you see the best neighborhoods, the areas that will benefit from what’s happening,” Gray said. “We’ve done a lot in technology and life sciences, global logistics, we had huge appreciation in the quarter in our portfolio and a lot of that was in those areas.”

Gray said Blackstone’s top themes for 2021 are travel, sustainability, and housing due to the COVID recovery.

“Looking forward, and certainly in the first quarter, we’ve been doing a lot around the COVID recovery play, so we’ve invested in a bunch of travel-related businesses…that’s an area we’re excited about,” Gray said.

Gray also said Blackstone is “excited about what’s happening in sustainability” and that the firm did a number of deals in Europe and the US to build out the electrical grid and help with environmental remediation.

Finally, Gray said he’d “add housing as another area where we have a bunch of enthusiasm” and that his firm has done deals in the US both in rentals and in single-family housing in the first quarter.

According to Bloomberg, Blackstone invested $17.7 billion in the travel, sustainability, and housing sectors in the first three months of 2021, buying hotels like Extended Stay America, private jet operator Signature Aviation, and a UK-based travel company called Bourne Leisure.

Gray was also asked about his views on inflation.

“I think that really is the big question, that’s the concern that exists and you see it in steel and lumber prices which are up double digits. Used cars are up 25% year-over-year. We’re beginning to see pressure on wages…and so I think that’s something that all investors need to take into account. I think there’s some risk on valuation multiples,” Gray said.

Gray’s comments come after Blackstone posted strong earnings results on Thursday.

Assets under management grew to $649 billion and private equity distributable earnings jumped 160%. Real estate distributable earnings also doubled to $540.8 million.

This pushed total first-quarter distributable EPS to $0.96, which beat analyst estimates for $0.76 and topped the $0.46 figure the company turned in the first quarter of 2020.

Shares of Blackstone traded up over 4% on Thursday after earnings were released.

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Bullish options trading has been declining over the last month as retail investors focus their attention on the economic reopening, Deutsche Bank finds

NYSE Wall Street coronavirus
  • Bullish options activity from retail investors has started to decline in recent weeks, Deutsche Bank strategists said.
  • The decline in options trading has coincided with an uptick in mobility indicators, restaurant bookings, and air travel.
  • It’s a sign that the retail-trading frenzy may be dying down as the economy re-opens.
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After heightened activity in 2020, the volume of bullish options trading has fallen since late January in a sign that retail investors are starting shift their attention, according to a team of strategists from Deutsche Bank.

In a Friday note, the strategists said that the size of call options trades that have risen and now fallen are small, indicating that they’re driven by retail investors. This comes as Wall Street begins to question whether the stay-at-home retail trading frenzy that was seen most prominently during the GameStop short squeeze will die down as the economy reopens and investors spend their money and time on other activities.

Deutsche Bank data also showed that mobility indicators, restaurant bookings, and air passenger traffic have all risen significantly in recent weeks as retail call volumes decline.

“This jives with our view that as retail investors have other things to do, the attention focused on the equity market will start to fade,” the firm said.

The options activity decline has also dragged down a basket of stocks with the highest call exposures that Deutsche Bank tracks. The group of stocks soared 160% in just over three months since November. However since mid-February, the basket has tumbled 24%, compared to the average stock in the S&P 500, which is up slightly in the same time period.

Although a lot of firms predicted that retail investors would put a large chunk of their stimulus money into stocks, Deutsche Bank found that two-thirds of those payments have already been distributed, implying that the impact of stimulus should start to fade in the market.

The analysts also noted that as these call volumes decline, stock market volatility may also trend lower. This could prompt systematic investors to raise already elevated allocations to stocks to record high levels, according to the strategists.

options activity

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