Blackrock (BLK) Earnings Excellent as Usual; Merrill Lynch (MER) Won't Be Selling

We mentioned at the end of June that Blackrock (BLK) was seeing some major share pressure due to the potential sale of its shares by Merrill Lynch (MER) [Jun 29: Merrill Lynch (MER) May Unload Blackrock Stake to Raise Capital] I wrote then

Frankly this is going to create (is creating) one heck of a buying opportunity in a great franchise; and to boot Blackrock has first dibs at buying the portion Merrill will choose (if they do) to sell off. This is not something that signals a change in operations or opportunity for Blackrock, simply a unique exogenous event.

Frankly, Goldman Sachs (GS) gets all the attention but I believe Blackrock, with incredible leadership, has become just as good of a franchise. I might say even better, because Goldman has inherent advantages of having their people placed throughout the heads of other Wall Street firms and throughout our federal government. (of course they don't talk to each other and give Goldman an advantage - nope, never, nada <--- my pure speculation) Blackrock just does it with good old fashioned execution. (note - these are completely different type of "financials")

Today, Blackrock did their normal thing - another stellar earnings in a terrible environment for financials. Helping the shares even more I believe is the fact that to raise capital Merrill Lynch (MER) instead sold off its stake in Bloomberg instead of Blackrock - lifting the Sword of Damocles from the head of BLK stock. Larry Fink remains among my favorite managers, and one of the few guys in this industry worth his weight in compensation.

I had cut back this position awaiting news of the Merrill Lynch situation and also to raise cash to buy other near term opportunities. In fact with this huge spike today I am selling off more at the $208 range to raise cash. Hoping for a pullback to add later in the year. If not, plenty of other opportunities being created this instant in the energy/commodity space. (what an implosion happening)

• U.S. money manager BlackRock Inc (BLK) posted a better-than-expected 23 percent rise in second-quarter profit on Thursday as assets under management rose.
• BlackRock, the largest publicly traded asset management company in the United States, also confirmed that U.S. investment bank and brokerage Merrill Lynch & Co (MER) had decided not to sell any of its 49.8 percent stake in BlackRock. A source familiar with the situation told Reuters on Wednesday that Merrill had decided to retain its stake in BlackRock.
• Second-quarter net income rose to $274 million, or $2.05 per share, from $222 million, or $1.69 a share, in the same quarter of last year.
• Assets under management, the main driver of revenue and profit at money managers, rose to $1.43 trillion at end-June from $1.23 trillion a year ago. Included in net new business of $63.2 billion was $43.6 billion in what BlackRock called "long-term portfolio liquidation assignments."

• "Market conditions remain highly unstable as the credit crunch and sharply deteriorating global equity markets continue to take a toll on investors worldwide. Investing in this environment is as challenging as I have ever experienced," BlackRock Chief Executive Laurence Fink said in a statement. (me too Larry, me too)