One Hedge Fund Lifted BlackRock’s Earnings Beat: How Much Did Crypto Add?

BlackRock beat third-quarter forecasts with help from a single hedge fund. Performance fees, which BlackRock charges when funds beat set targets, hit $630 million, about $200 million above analyst estimates.

The world’s largest asset manager still posted big numbers. Adjusted earnings per share rose 38% to $15.93, clients added $205 billion, and assets reached a record $15.5 trillion. Shares rose about 3% before the market opened.

Why did BlackRock’s Performance Fees Double in 3 Months?

Performance fees more than doubled from $305 million in the second quarter, according to BlackRock’s filing.

Most of the jump came from hedge-fund-style products, which BlackRock calls liquid alternatives. Their fees rose from $100 million to $409 million in one quarter.

BlackRock tied the rise from a year earlier largely to one hedge fund. That fund measures its results once a year, and the period closes in the third quarter.

Those fees carried a large share of the quarter. They made up nearly half of BlackRock’s $668 million revenue increase from the second quarter.

How Much Did BlackRock’s Crypto Bets Add?

Crypto stakes also helped. BlackRock booked an $80 million gain on Securitize, a firm that turns funds and stocks into blockchain tokens. Securitize stock jumped 15% in September after a US regulatory exemption.

It added a $22 million gain on Circle, issuer of the USDC stablecoin, a token pegged to the US dollar. A year earlier, the same stake produced a $115 million loss.

Both gains came from higher valuations, not sales. Circle stock fell 11% in a single day in September, showing how quickly those valuations can move.

BlackRock said higher income outside its core business helped adjusted EPS grow 38%, while adjusted operating income rose 27%.

What Changes in the Fourth Quarter?

Chief executive Larry Fink said BlackRock enters its “seasonally strongest fourth quarter with accelerating momentum.” The hedge fund behind this quarter’s fee jump does not reach its next annual measurement date until the third quarter of 2027.

BlackRock did not name the fund in its earnings release. It has given the same kind of explanation before. In 2020, then-finance chief Gary Shedlin credited “a single hedge fund that locks annually in the third quarter” for a jump in fees.

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