The Blackstone Group's profits went down by 70 percent in the last quarter of 2015 amid weak stock markets.
Blackstone, the world's largest alternative asset manager based in New York City, also suffered some loss on its shares in the Hilton hotel chain, according to The Real Deal.
The corporation's economic net income was down from $1.45 billion to $435.7 million. Although analysts had expected Blackstone's profits to remain at 44 cents per share, it plunged to 37 cents per share.
While the share prices affect the fund manager's net income, another factor to blame is the weak stock markets. GSO Capital Partners, Blackstone's credit arm, took a significant hit from falling oil prices and saw its profits decline by up to 87 percent. The company's stake in Hilton Worldwide Holdings, on the other hand, has lost as much as $2.3 billion in value since September.
"It's really just noise," Blackstone's president Tony James argued. "We do not believe the markdowns represent permanent diminution of values, impairments or changes in what we ultimately expect to realize from our investments."
Weaker performance of private equity, real estate, hedge and debt funds - where the Blackstone Group generates most of its income by charging the investors for management - translates into lower earnings. As the world's largest manager of alternative assets, Blackstone's funds have $336.4 billion in assets under management.
The report came as a worldwide stock drop in January threatens to hit this year's first-quarter earnings of Blackstone and other large private equity managers, from Carlyle Group LP and KKR & Co. to Apollo Global Management LLC. The companies mark the value of their held investments - a key factor of economic net income (ENI) - in line with the market, as reported by Hellenic Shipping News.
"We are lowering expected ENI through 2018 to reflect more muted real estate public portfolio marks and tougher credit returns in the fourth quarter," according to analysts at Goldman Sachs Group Inc headed by Alex Blostein.
On Wednesday, Jan. 27, Blackstone closed at $25.60, down 12 percent this year and 16 percent (including reinvested dividends) since end of September.
