Neck-on-the-line prediction of the day, if not the decade, comes from Peter
Cohan at Bloggingstocks, who put a post up yesterday evening headlined "Blackstone’s
units to triple tomorrow, close at $90". If he’s right, he will deserve
some serious accolades, and will almost certainly attract millions of dollars
for his firm, Peter S Cohan & Associates. On the other hand, if he’s right,
pigs are likely to start flying, and there’s a good chance that the stock will
cease trading after they lift Steve Schwarzman, on a litter, to a heavenly bed.
Cohan’s stated reason for his ultrabullishness is silly:
The value of these units is likely to skyrocket tomorrow when they begin
trading on the New York Stock Exchange. The reason is that the offering is
seven times oversubscribed — that means that orders for Blackstone’s units
exceed supply by a factor of seven!
Cohan knows, or should know, that the main reason that the offering is oversubscribed
is, well, that it’s oversubscribed. Let’s say you want 1,000 shares. You know
that if you put in an order for 1,000 shares, then you’ll be scaled back to
much less than that. So instead you put in an order for 5,000 or 10,000 shares,
in the hope that come this morning, you’ll actually receive the 1,000 shares
you wanted in the first place.
There’s certainly no reason to believe that a lot of demand for BX
at $31 means there’s any demand at all for it at $90. I daresay the stock will
rise today: with 17 underwriters on this deal, there will be a lot of egg on
a lot of faces if it doesn’t. But it’s not going to triple, or even double.