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Barron’s is an interesting magazine, because it has attempted to provide value investing tools to retail investors at scale. A popular niche publication that has survived the decimation of the digital revolution, print magazines are still circulated among many retirees, high net worth individuals, and non-financial professionals looking into the magazine for insight.

While Barron’s often agrees with sell-side analyst reports, and will often incorporate those reports into its articles, the publication is not a financial research product. Rather, it is to Wall Street research what New Scientist is to Nature; a compelling and entertaining layman’s summation of the professional work.

Just as a scientist would not replace journal reading with magazine reading, a Wall Street analyst cannot replace his investment bank and independent research firm’s reports with Barron’s. Yet that doesn’t mean Barron’s is often wrong or its insights are invaluable; rather that it does not provide comprehensive evidence for its arguments that a professional investor would need to follow its advice.

For students of finance, Barron’s can be an insightful publication for two reasons. Firstly, it makes accessible the complex and technical work done in professional reports. Secondly, it shows us how retail investors think and are guided, which in itself can be useful when interacting with retail clients and when trying to understand fund flows in a complex market dominated by personal wealth.

With that in mind, let’s take a look at a recent pick by Barron’s: Blackstone Group (BX), itself a financial behemoth that has benefited from the financial sector run-up following President Trump’s victory. The private equity shop has seen its stock jump 15% since Trump won, but that’s nothing compared to the huge gains seen in the investment banking (GS, MS, JPM) and retail banking (WFC, C, BAC) worlds. So stating the stock may have more upside—Barron’s says 40% from current levels—is not terribly controversial or shocking.

However, the complex corporate structure and opacity regarding Blackstone’s holdings makes it difficult to analyze. That is why Barron’s thinks BX has an 18.5 P/E ratio—investors just are too scared to take a dip. However, Barron’s thinks dividend growth is coming, in addition to the potential upside from tax reform, growing capital raising opportunities due to a risk-on market, and a strong position to make new deals in a market where M&A and capital raising activity is heating up.

These are all strong arguments, but they warrant analyst scrutiny.

While Barron’s has generated the idea, it is still relatively unfounded from the perspective of an institutional investor. Analysts will need to dig deeper to see if these claims are specious or not. For instance, on the dividend issue—how are opex and net income trending relative to revenue, and is growth offset by share issuances? What is dividend coverage and is it strengthening—and if it is, what is driving it? Where does BX get its revenue? The company is famous for private equity investments that offer returns much higher than the stock market; it’s also famous for its big and unconventional bet on housing by buying billions’ worth of houses during the depths of the Global Financial Crisis. The firm is also spinning off that business. How does these impact the income potential and dividend coverage for BX shares themselves?

These are only starting questions, but they’re questions that will involve a few hours of Edgar searches to get answers. Those answers can then be tabulated in a spreadsheet and used to generate a model that then can become the basis for a professional investment thesis and a target price.

This is the hard work that Barron’s writers are lucky enough to be able to avoid. But it’s also what the pros are paid to do.

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