Ticker BLK NYSE

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BlackRock, Inc.

• Ticker (BLK) NYSE
• Asset Management Custody Banks
• Steve Murray

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Team Recommendation

• Our one year target price is 218
• Appropriate purchase price (rationale) 200
• Top 3 reasons to purchase
• Recent Strategic Acquisitions
• Strong Risk Management Products
• International Expansion

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Company Description

• BlackRock is a premier provider of global
  investment management services
• As of September 30, 2007, BlackRock manages 1.36
  trillion across fixed income, equity, liquidity,
  asset allocation/balanced, real estate, and
  alternative strategies for institutional and
  retail clients worldwide
• BlackRock serves clients from offices in 19
  countries, maintaining a major presence in North
  America, Europe, Asia-Pacific, and the Middle
  East
• BlackRock employs approximately 5,100 employees,
  including more than 550 investment professionals
  worldwide

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Business Units/Segments

• Fixed Income Asset Management
• At the end of 2006 fixed income products
  accounted for 41 of total assets under
  management, equity products 35, money market or
  liquidity products 20, and alternative
  investment products 4

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Business Units/Segments
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Key Drivers-Acquisitions

• Merrill Lynch Investment Management (MLIM)
• Expands global presence and diversifies business
• Revenues reached a record 2.1 billion, and
  diluted earnings per share increased 32 to 5.33
  for 2006
• Alternative platforms were expanded with private
  equity fund of funds, international real estate
  and equity hedge funds
• The merger substantially expanded their
  capabilities, propelling equity assets to 392.7
  billion or 35 of total assets under management
• Fixed income assets under management increased to
  455.9 billion and their platform was enhanced
  with euro, sterling, U.S. tax-exempt and
  distressed investment expertise

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Key Drivers-Acquisitions

• Quellos Group
• Funds-of-Funds business
• Added 22 billion in assets under management
• 7 billion of private equity AUM and 20 billion
  of hedge fund AUM
• SSRM Holdings
• State Street Research Management, State Street
  Research Management Co. (SSR) and SSR Realty
  Advisors, from MetLife, Inc.
• Added 52 billion in assets under management

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Key Drivers

• Strong Risk Management
• BlackRock Solutions business has become
  increasingly well-diversified across products and
  clients
• BlackRock Solutions revenues from system
  outsourcing, risk management, advisory and
  transition management services grew by 20 to
  148.0 million in 2006
• Aladdin- risk analytics, portfolio management,
  compliance and operational processing
• Riskier environments lead investors to less
  volatile markets like money market funds
• 30 billion moved into BlackRocks liquidity
  products

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Key Drivers

• International Expansion
• 383.3 billion of their assets international
  investors in more than 50 countries
• 3rd Quarter- 9.9 billion in inflows (24)
• MLIM added their industry leading international
  mutual fund platforms
• 48 of equity and balanced AUM were managed for
  U.S. investors and 52 for international clients
• In the 4th quarter, nearly 50 of pre-tax income
  came from international clients
• International clients typically invest in riskier
  funds with higher returns and higher fees
• Plans to open 5 new offices outside the US within
  the next year

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Key Drivers

• International Expansion

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Competitive Landscape

• Franklin Resources Inc. (BEN)-The Investment
  Management and Related Services segment provides
  investment management and fund administration
  services, and other related services, The
  Banking/Finance segment provides retail-banking
  and consumer lending services, including
  automotive lending related to the purchase,
  securitization, and servicing of retail
  installment sales contracts consumer credit and
  debit cards real estate equity lines and home
  equity/mortgage lending. It offers its services
  to individuals, foundations, and institutions
  worldwide
• T. Rowe Price Group Inc. (TROW)-provides its
  services to corporations, corporate, public, and
  Taft-Hartley retirement plans, foundations, and
  endowments. Through its subsidiaries it manages
  separate client-focused equity, fixed income, and
  balanced portfolios common trusts, and
  institutional mutual funds, and advisory services
• Ameriprise Financial Inc. (AMP)-provides
  financial planning, asset management, and
  insurance services to individuals, businesses,
  and institutions
• Fortress Investment Group LLC (FIG)- provides its
  services to pension funds, endowments and
  foundations, financial institutions, funds of
  funds and high net worth individuals. It manages
  hedge funds and publicly traded alternative
  investment vehicles
• Legg Mason Inc. (LM)-provides investment
  management and related services to institutional
  and individual clients, company-sponsored mutual
  funds, and other investment vehicles worldwide

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Current News- 4q07 Earnings

• 1/17- BlackRock Inc.'s fourth-quarter earnings
  jumped 90 from last year
• 75 billion of net inflows in their cash
  management products in 2007, its conservative
  funds and its alternative investment products
• 22.2 billion increase in money market funds, 72
  of total net flows in 4th quarter
• Net income rose to 322.4 million, or 2.43 per
  share, from 169.4 million, or 1.28 per share, a
  year earlier. Revenue surged 42 percent to 1.44
  billion from 1.02 billion last year
• Analysts were expecting 2.15 a share with 1.31
  billion in revenue
• Investment and advisory fees rose 34 to 1.16
  billion, and advisory performance fees nearly
  quadrupled to 153 million
• Equity and balanced products saw record net
  inflows of 10.8 billion
• 4 billion in fixed income outflows

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Current News

• 1/30- Raised 28 billion in liquidity, money
  market, assets ytd in 2008
• 1/16- BlackRock Inc. announced the appointment of
  John Thain, CEO of Merrill Lynch, to the
  company's Board of Directors
• 1/15- Merrill Lynch agreed to issue 6.6 billion
  of mandatory convertible preferred stock to
  long-term investors (Korean Investment
  Corporation, Kuwait Investment Authority, and
  Mizuho Corporate Bank)
• 6/26/07- Acquired Quellos Capital Management
• 9/29/06- Acquired Merrill Lynch Investment
  Managers (MLIM)
• 1/28/05- Acquired State Street Research
  Management

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Company Strategy

• BlackRock offers a wide range of investment
  solutions reflecting the varied needs and
  preferences of their clients. They have fixed
  income portfolios with exposure to global bonds,
  but they also manage bond portfolios denominated
  in U.S. dollars, sterling, euros, yen and
  Australian dollars. In equities, in addition to
  U.S., international and emerging market
  offerings, they manage equity portfolios with
  strategies specific to the UK, Europe, Japan and
  Australia. They manage sector-specific mandates
  across asset classes as well as multi-asset class
  strategies. Their strategies are tailored to
  appeal to both taxable and tax-exempt investors
  with diverse appetites for return and risk

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Comparables
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Comparables
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Financial Ratios
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5-Year Summary
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Projections
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Valuation
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Biggest Threats/Concerns

• Potential challenges associated with integrating
  the MLIM and Quellos businesses with its existing
  business, including risk of losing key personnel 
• Ability of BlackRock to effectively manage the
  former MLIM and Quellos assets along with its
  historical assets under management
• Changes in the interest rate environment,
  financial and capital markets
• Increased foreign exchange rate risk as a result
  of MLIM transaction
• Increased competition

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Stock Chart
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Team Recommendation

• Our one year target price is 218
• Appropriate purchase price (rationale) 200
• Top 3 reasons to purchase
• Recent Strategic Acquisitions
• Strong Risk Management Products
• International Expansion

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Questions?