Back in August 2018, I made a bold prediction...
I was absolutely certain that one particular stock was going to at least double over the coming months.
In fact, I was so confident that I even told folks that this opportunity was "the surest triple I've seen in years."
But this wasn't some small-cap, high-flying tech stock. Instead, it was a World Dominating Dividend Grower... a company that had been quietly churning out billions of dollars in payouts to shareholders for the past 10 years.
It was big and safe, and it paid its shareholders a ton of income.
And yet, practically no one was watching for the simple, singular event that was likely to send it soaring in the very short term...
The stock I was so confident in was private-equity firm Blackstone (BX).
Blackstone is a fantastic company... It's the largest alternative investment firm. And since the company went public in 2007, it has grown its assets by a remarkable 16% a year.
I've liked Blackstone for a while, but I thought there were two very specific things that were going to happen to the stock that would cause it to soar.
Blackstone is a stock I would want to own regardless, but if both came true, the returns would be incredible for investors.
This morning, one of my predictions came true... And it sent the stock up by nearly the exact amount I predicted.
Before I get to all the details of the news that broke, let me give you some background...
You see, Blackstone structured its publicly traded business as a master limited partnership ("MLP"). Being an MLP had its advantages... The partnership pays virtually no corporate income tax. It passes its income on to the partners and the partners pay taxes. This allows it to book higher earnings and pay a higher yield. And that served Blackstone well for years.
But I knew it wouldn't remain an MLP for long. Here's what I told subscribers of my Income Intelligence advisory back in August 2018:
Investors find MLPs to be a hassle. You have to fill out some special tax forms, and they can be trouble in tax-sheltered accounts like IRAs and 401(k)s. More important, many institutions and indexes won't include MLPs. That keeps untold billions from being invested in Blackstone, just as a matter of classification.
The game changed with the tax bill in 2017...
With the 2017 tax bill from Trump and the Republicans, the corporate tax rate dropped from 35% to 21%. That changes the math on the MLP decision. Avoiding taxes doesn't save you so much when tax rates are so much lower. That's why we think Blackstone will convert to a common corporation. It would rather pay more in taxes to attract more investor money.
The MLP structure no longer made sense. I thought it was only a matter of time before it would convert to a corporation. I made the claim that...
We suspect Blackstone will soon wind down its master limited partnership and convert to a common corporation.
This could boost the wealth of partnership holders by 100%.
Again, I don't usually make claims like this. I'm conservative by nature. But this was a lay-up that few were talking about.
By converting to a common corporation, billions of dollars were going to flow into this stock. And with a market capitalization of $24 billion at the time, that was going to move the needle for the stock price.
And that brings us back to the big news of today...
This morning, Blackstone reported its first-quarter earnings... beating on both revenue and earnings. But the real news was its big announcement.
As I predicted back in August, Blackstone has finally decided to convert from a publicly traded partnership to a corporation.
Investors loved the news and shares were up nearly 10% before the market opened this morning.
Here's the exact prediction I gave my Income Intelligence subscribers back in August...
We suspect that when Blackstone announces a conversion, shares will pop 15% to 20% on the news. Over the next year, as the conversion happens, new investor money will drive shares at least 50% higher, but possibly as much as 80% to 100% higher.
Of course, we'll also be buying a world-class asset management company – so expect shares to rise just because it's a great business.
Billions of investor dollars could soon flow into the stock thanks to this conversion. We got the conversion right and the pop in the stock... but this is just the beginning. Shares could go up as much as 100% as new money flows in.
But remember, I made two predictions about Blackstone. The conversion was just the first.
There is something else that I believe will happen soon that will send additional billions of dollars into the stock. That's going to send the stock even higher. And now that Blackstone converted to a corporation, I'm more confident that my second prediction will come true.
I've highlighted my Blackstone predictions and how the company could triple your money in my Income Intelligence newsletter (current subscribers can read it right here)... where we look for the safest ways to earn big income in the market.
For example, a few months ago I found a way to make more than 12% in an infrastructure company...
Last month, I detailed how to make money from a forest without any of the hassle of cutting down trees yourself...
And tonight, after the market closes, I'll detail how to earn safe income from solar energy – a market that most investors have left for dead. After all, most solar companies lose money. But we've found one that not only makes money and pays its shareholders well... it's only had one small loss ever out of billions in projects.
If you're interested in learning more, click here.
Editor's note: Our offices are closed for Good Friday tomorrow. Expect your next Health & Wealth Bulletin issue on Monday, April 22.
What We're Reading...
- Something different: The best hikes in every state.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
April 18, 2019