Why would people buy PE firm stock when they can invest in the funds
Which one makes higher returns - invest in the illiquid funds or buy blackstone stocks? What are the pros and cons of each?
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Well, do you want to be a customer or an owner?
Owning Blackstone shares are likely the better trade in the medium / long-term for many reasons but to distill it into one - none of Blackstone's funds are likely to (and arguably are even designed to) generate massive outperformance anymore, they're designed so that the largest LPs in the world has one easy place to stash all their money hoping for a reasonable return - and in exchange they pay ~1.5-2% management fees every year.
So it is very reasonable to see a world where Blackstone's funds generates pretty average returns yet vacuums up AUM. This is kind of like being the only dentist in town. The dentist isn't the best but does an adequate job for her customers. Would you rather be a customer or the dentist?
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