The Zacks Analyst Blog Highlights: Carlyle Group, Blackstone Group, Kohlberg Kravis Roberts, Waddell & Reed Financial and GlaxoSmithKline

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Nov 29, 2013, 09:30 ET

CHICAGO, Nov. 29, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Carlyle Group LP (Nasdaq:CG-Free Report), Blackstone Group LP (NYSE:BX-Free Report), Kohlberg Kravis Roberts & Co. L.P. (NYSE:KKR-Free Report), Waddell & Reed Financial, Inc. (NYSE:WDR-Free Report) and GlaxoSmithKline (NYSE:GSK-Free Report).

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Here are highlights from Wednesday's Analyst Blog:

Carlyle Group Making New Acquisition

In an attempt to diversify its business, The Carlyle Group LP (Nasdaq:CG-Free Report) recently announced that it will acquire Diversified Global Asset Management Corporation (DGAM). The acquisition is expected to be complete by Feb 2014.

Carlyle will initially pay $33 million – $25 million in stock and $8 million in cash – for DGAM and then an additional amount of maximum $70 million might be paid over the following seven years, subject to performance of DGAM. Management at DGAM will remain unchanged.

Incepted in 2004, DGAM has roughly $6.7 billion in managed and advised assets. On completion of the acquisition, it will be a part of Carlyle's solutions platform, which includes funds of private equity funds. As a result of this deal, Carlyle's solutions platform will be able to offer diverse investment solutions across hedge funds, private equity and real estate to its clients. The latter had $48.4 billion in assets under management as of Sep 30, 2013.

The deal with DGAM will mark Carlyle's first venture into funds of hedge funds. However, the company already owns 55% stake in three regular hedge funds: credit specialist Claren Road Asset Management; emerging markets investor Emerging Sovereign Group; and commodities expert Vermillion Asset Management.

Following the footsteps of asset manager Blackstone Group LP (NYSE:BX-Free Report) and Kohlberg Kravis Roberts & Co. L.P. (NYSE:KKR-Free Report), Carlyle has been diversifying its business over the past decade to grow assets and reduce greater dependence on leveraged buyouts. Carlyle recently acquired a 40% stake in Dutch investment manager AlpInvest Partners NV and completed the acquisition of Metropolitan Real Estate Equity Management LLC, a fund-of-funds investor in property.

We believe that Carlyle's efforts to diversify beyond its traditional business will help to boost earnings amid a volatile operating environment. Also given its sound liquidity and balance sheet position, we expect the company to drive further inorganic growth in the quarters ahead.

Carlyle currently carries a Zacks Rank #3 (Hold). A better-ranked stocks in the same sector include Waddell & Reed Financial, Inc. (NYSE:WDR-Free Report), which carries a Zacks Rank #1 (Strong Buy).

Update on Glaxo's Avandia

GlaxoSmithKline's (NYSE:GSK-Free Report) Avandia is available for type II diabetes. Avandia came under the FDA scanner in 2007 after an article in the New England Journal of Medicine (NEJM) linked the use of Avandia (rosiglitazone) with increased risk of cardiovascular events. Following the report Glaxo revised the U.S. label on Avandia.

In 2010, the European Medicines Agency (EMA) banned Avandia, while the FDA severely restricted the use of the drug. Annual sales of Avandia have fallen drastically to £6 million (in 2012) from £1.6 billion in 2006.

In Nov 2013, Glaxo announced that the U.S. Food and Drug Administration (FDA) has eased the restrictions on Avandia use. The FDA has suggested label modification about cardiovascular safety apart from certain changes to the Risk Evaluation and Mitigation Strategy (REMS) program. The FDA has waived the post market study requirement.

In Jun 2013, the joint advisory committee (comprising the Endocrinologic and Metabolic Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee) to the FDA voted in favor of easing safety restrictions related to Avandia.

Of the 26-member panel, 13 voted in favor of modifying and 7 in favor of removing the Avandia REMS program. However, 5 members were in favor of continuing the REMS and 1 recommended removal of Avandia from the U.S. market.

We remind investors that the Rosiglitazone Evaluated for Cardiovascular Outcomes and Regulation of Glycemia in Diabetes (RECORD) trial did not show an elevated risk of heart attack or death in patients being treated with Avandia versus standard diabetes therapies.

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