Getting Ready For Large Blackrock Share Supply (BLK, BCS)

Blackrock, Inc. (NYSE: BLK) is about to get a huge amount of shares dumped onto the stock market.  Barclays (NYSE: BCS) is set to unload a stake of about 19.6% or so which was worth more than $6.1 billion.  Due to an ongoing share sale in the market, that stake is now worth closer to about $5.8 billion.

We have seen that Blackrock will buy about $1 billion of the shares itself as part of a share repurchase plan.  Still, that leaves about $5 billion that the market will have to absorb and this comes at a time when it is an understatement to say that Main Street is not exactly hot on Wall Street investment banking and money management firms.

Barclays is unloading these shares before new Basel rules apply which would have forced the company to count the share stake as capital. The offering is being conducted by Barclays itself along with the firms of Morgan Stanley and BofA Merrill Lynch.  Barclays owns 32,178,505 shares of the series B convertible preferred stock and 3,031,651 common shares per the filing, and this comes to roughly a 19.6% economic interest in Blackrock.  The applicable percentage of ownership for the selling stockholder is based on 139,564,123 shares of common stock outstanding as of March 31, 2012.

Blackrock also has a filing for a note offering which will ultimately be led by Citigroup, J.P. Morgan, and by Wells Fargo Securities.  Blackrock shares were at $180 as recently as May 11 and the shares closed at $171.91 just this last Friday.  Shares closed at $167.73 on Monday and now shares are down another 1.2% to $165.86 in mid-day trading in New York.

Blackrock’s big issue here is that it rarely trades 1 million shares in a day, with only 8 trading days of 1 million or more shares in just the last three months and just ten trading sessions with 1 million shares or more in the prior three-month period.

Blackrock has traded in a range of $137.00 to $209.37 over the last 52-weeks.  The market value today is $29.8 billion, so this is going to be a large offering to absorb.

Dow Jones has listed that the secondary offering is set to price on Wednesday evening for Thursday trading.

JON C. OGG