Barclays Capital in an equity research note to clients today downgraded publicly traded alternative manager Blackstone Group and hedge funds Fortress, GLG and Och-Ziff.
Blackstone was downgraded to underweight from overweight and Fortress, GLG and Och-Ziff were rated neutral from overweight.
The report initiated coverage of money manager Janus Capital Group at underweight, Invesco, Legg Mason and T. Rowe Price at neutral, and BlackRock at overweight.
The industry needs to work through significant near-term headwinds, Barclays Capital analyst Roger A. Freeman wrote in the research note, which we believe will dominate the investment thesis for the time being.
Given the magnitude of the AUM decline going into 2009, we do not believe cost reductions will be able to fully offset the revenue shortfall, Mr. Freeman wrote in the research note. He said Barclays Capital expected margins to decline meaningfully.
The report also said the stocks of the money managers in the note to clients are trading well above the high end of their historical ranges and could come under pressure as estimates decline.