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From The Opalesque Team:

BlackRock shares shot up 12.3% in the hours following Tuesday’s quarterly earnings call, even as the firm reported a 56% drop in income (compared to 1Q08). With assets under management of $1.283tn, BlackRock is one of the largest asset managers, and the first to report quarterly earnings. While the income drop quarter over quarter was significant, Chairman and CEO Laurence D. Fink pointed out during the call that the firm assets were only down 6% from a year earlier.

Alternative investments Outflows in BlackRock’s alternative investments were almost entirely in hedge funds and funds of funds (FoHFs). Clients are still reducing their alternatives, Fink said, noting that many of these redemptions were driven by clients’ liquidity needs. “We don’t have a strong view on which way it is going, but the trend in the alternatives space is still more negative than what we see in the traditional spaces of equities, and fixed income, risk management, and our solutions space.” said Fink.

The earnings report noted that performance in hedge funds and FoHFs had improved over the quarter, a reflection of the hedge fund industry’s slight gains during this period.

Within the alternatives space, BlackRock’s recent acquisition of hedge fund firm R3 Capital Partners is indicative of the strong interest the firm has in credit and distressed debt.

Outlook Citing a return of institutional investor RFP searches ......................

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