The Zacks Analyst Blog Highlights: BlackRock, Blackstone Group, Cohen & Steers, AllianceBernstein Holding and Starbucks

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Sep 09, 2014, 09:30 ET

CHICAGO, Sept. 9, 2014 /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 BlackRock, Inc. (NYSE:BLK-Free Report), Blackstone Group L.P. (NYSE:BX-Free Report), Cohen & Steers Inc. (NYSE:CNS-Free Report), AllianceBernstein Holding L.P. (NYSE:AB-Free Report) and Starbucks Corporation (Nasdaq:SBUX-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Will Asset Managers See a Hiatus from SEC-Derived Rules?

Similar to the new regulatory and capital rules for the banks in the post-crisis period, the asset-management industry may also have to fulfill strict capital requirements. Per a Wall Street Journal report, the U.S. Securities and Exchange Commission (SEC) is devising new rules to enhance the oversight of mutual funds and hedge funds industry. On the SEC's part, this comes as an effort to ensure that the asset management industry is adequately shielded from any kind of financial shock.

Per the report, the SEC is in a preliminary stage of framing rules for the asset-management industry – including mutual funds, hedge funds and private-equity funds – in order to lower overall systematic risks.

In the new regime, we believe that asset managers such as BlackRock, Inc. (NYSE:BLK-Free Report), The Blackstone Group L.P. (NYSE:BX- Free Report), Cohen & Steers Inc. (NYSE:CNS-Free Report), AllianceBernstein Holding L.P. (NYSE:AB-Free Report), Fidelity Investments and Pimco will be required to disclose more information to the regulators about their portfolio holdings.

Further, asset managers may have to undergo the stress test to prove their capability to withstand financial shocks such as an abrupt change in interest rate or a widespread redemption.

Will the Rules Curb Asset Managers Business Growth?

The new rules, if implemented, are likely to restrict the usage of high-yielding but risky derivative products. We believe that it will, to some extent, limit the revenue growth of the asset managers. Moreover, meeting the regulatory capital requirements will restrict asset managers to expand their business. Basically, the advantages of high liquidity will not be there going forward.

SEC Concerns

The fact that some fund houses use derivative products in the portfolio to boost returns pose worries for the SEC. Again, burgeoning of alternative mutual funds with hedge-fund-line strategies is another cause of concern. Alternative asset managers not only aggressively use derivatives in both alternative funds and certain leveraged exchange-traded funds, but also sell these products to small investors.

However, if the new rules are implemented, we believe that the asset managers would be forced to limit the use of derivatives in mutual funds, so the risk will be lower. Moreover, the stress test, which is now mandatory in the banking sector, will serve to ensure that the mutual fund industry possesses the necessary loss-absorbing capital to counter large-scale redemptions or a sudden movement in the interest rate.

Starbucks to Test Express Cafes, Focus on Reserve Brand

Starbucks Corporation (Nasdaq:SBUX-Free Report) recently announced that it plans to open small footprint express stores next year in New York City to cater to the on-the-go coffee drinkers.

This new type of coffee shops will feature limited food and beverage items. The stores will also speed-up service by allowing customers to order ahead through their mobile devices using the mobile ordering facility.

The express format follows the success of Starbucks' highly popular drive-through concept. Drive-through stores, accounting for more than 40% of company-owned stores in the U.S., generate higher revenues and profits compared to traditional stores.

Starbucks also stated on Friday that it plans to open its first ever Starbucks Reserve Roastery and Tasting Room in Seattle in December this year. The unique concept will offer roasting, education and retailing in one café. With the roastery, Starbucks expects to double its small-batch roasting capacity of these unique arabica Reserve brand coffees to 1,500 stores globally.

Moreover, the company also plans to open 100 upscale coffee stores over the next five years that will sell Starbucks Reserve coffees exclusively. Starbucks already operates such stores in Japan and Latin America.

Starbucks expects to open 1,550 stores in 2014 — 650 in the Americas, 150 in Europe, Middle East and Africa (EMEA) and 750 in China-Asia-Pacific (CAP). In fiscal 2015, the company targets 1,600 store openings — 650 in the Americas, 150 in EMEA and 800 in CAP.

Starbucks carries a Zacks Rank #3 (Hold).

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