M&A

29 October, 2009

Blackstone shares have pre-earnings rally

* Private equity firm's shares rise 7.5 pct

* Blackstone to report earnings on Nov. 6

* Expected to be good, with Citadel good news helping

CHICAGO/NEW YORK, Oct 29 (Reuters) - Shares of private equity firm Blackstone Group (BX.N) rose 7.5 percent on Thursday, which options analysts attributed to expectation of positive earnings when the firm reports on Friday, Nov. 6.

Shares rose to $13.87. Still, that is less than recent highs above $17 and the price remains far below the summer 2007 IPO price of $31 a share.

"There are couple of reasons for the Blackstone rally today," said Joe Kinahan, chief derivatives strategist at TD Ameritrade. "Number one, next week's earnings are expected to be very good and number two, some positive spillover from Citadel."

Hedge fund Citadel said earlier on Thursday that it is lifting a ban on redemptions at two of its funds, Wellington and Kensington Global Strategies.

Blackstone manages a variety of funds of hedge funds.

In the options market, traders favored Blackstone call options, contracts granting them the right to buy the shares at a fixed price within a specified time period.

A total of 14,000 calls traded, above its average daily volume of 7,829 contracts and five times the number of puts, according to option analytics firm Trade Alert.

The most active option was the March $16 call strike, which traded 7,225 times and exceeded the number of its contracts outstanding, indicating new positions were initiated, Reuters data showed.

"Investors are looking for companies that have a chance to move up going into their earnings and Blackstone may be one of them," said William Lefkowitz, options strategist at brokerage firm vFinance Investments.

The company said earlier on Thursday that it will report earnings on Friday, Nov. 6. (Reporting by Doris Frankel in Chicago and Megan Davies in New York; Editing by Gary Hill)

Source: http://www.reuters.com