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BlackRock announces closure of Absolute Return Strategies

Thursday, June 02, 2011
Opalesque Industry Update – The world’s largest asset manager BlackRock has announced plans to wind down its closed-ended Absolute Return Strategies fund of hedge funds over the widening discount of its Net Asset Value (NAV).

In a report by the, the New York-based company with $3.65tln in assets under management, said it is closing down the fund three years after its May 2008 launch. BlackRock’s Absolute Return Strategies Ltd now has an estimated £130m in NAV.

Commenting in the firm’s closed-ended report in April, the fund’s Chairman Colin Maltby said the discount on the strategies NAV has widened significantly despite efforts taken to limit it.

Maltby said in the report, “Despite the strong positive return delivered by the company's [BlackRock Absolute Return Strategies Limited] NAV over the past two years and the reduction in the supply of the company's shares through the reverse auction tender offer and the on-market share repurchase, the share price discount to NAV of each share class has continued to be relatively wide.”

He added that the fund's board would continue to find various ways to address the discount which would be beneficial to all shareholders.

But board has decided to wind down the fund and pointed out that investors are still concerned with the level of discount as well as the relative small market capitalization of the company.

BlackRock firm equiy update
Meanwhile, Goldman Sachs on Wednesday upgraded the credit ratings status of BlackRock from “Neutral” to “Buy” with a $240 price target. The unexpected upgrade suggested a a 17% rise to the stock’s Tuesday closing price of $205.56.

An analyst at Goldman Sachs was quoted by as saying, “In our view, BLK’s flows are poised to accelerate, strong FCF and capital generation implies further stock buybacks of insider holders, and current valuation undervalues the secular attraction of BLK’s well-diversified AuM base.” BlackRock shares rose $2.43, or +1.2%, in Wednesday's trading.
Precy Dumlao

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