BlackRock's Private Credit Woes: Time to Sell the Stock?

Shares of BlackRock BLK are down 10.7% this year, with the recent private credit woes majorly hurting investor sentiment. The company has restricted withdrawals from its private credit fund, HPS Corporate Lending Fund (“HLEND”), following a jump in redemption requests. This was first reported by the Financial Times.

HLEND, which manages approximately $26 billion and is one of BLK's largest private credit funds, received nearly $1.2 billion in redemption requests (9.3% of its net asset value) in the ongoing quarter. However, the fund will pay out $620 million, touching the 5% quarterly threshold. 

BlackRock acquired HPS Investment Partners last year as part of its efforts to expand into private credit, which offers a way to diversification from the traditional public markets. Additionally, the company acquired ElmTree Funds, Preqin and Global Infrastructure Partners as part of a strategic expansion of its Aladdin technology business into the rapidly growing private markets data segment.

Nonetheless, recent concerns, including rising redemptions, tighter liquidity, valuation scrutiny and mounting default headwinds, are weighing on alternative asset managers such as BlackRock, Apollo Global APO, Blue Owl Capital Inc. OWL and Blackstone BX. Hence, shares of these companies have faced bearish investor sentiment, with all trading in the red. 

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HLEND’s redemption request news came amid growing apprehensions about systemic risks in the private credit market. Earlier this month, Blackstone announced a rise in its redemption cap from 5% to 7% after facing a surge of investor requests. Last month, Blue Owl Capital moved to restrict investor withdrawals from one of its retail-focused funds. Further, Apollo Global’s CEO, Marc Rowan, has warned that a shakeout is coming for private credit firms as the industry faces concerns about rising defaults on loans to software companies.

Against such a backdrop, it is important to evaluate how these factors may affect BlackRock and how market participants should approach the stock in the current environment. Let’s delve deeper and analyze BLK’s investment worthiness.

Product Diversification to Boost BlackRock’s AUM

BlackRock has been focusing on diversifying its product suite and revenue mix, which, along with acquisitions, has been improving assets under management (AUM) over the years. AUM recorded a five-year (2020-2025) CAGR of 10.1%, driven by an inorganic expansion strategy and upbeat market returns. As of Dec. 31, 2025, total AUM was a record $14.04 trillion. 

In 2025, BlackRock witnessed record net inflows of $698 billion, after $641 billion of inflows in 2024. The momentum will likely continue as efforts to strengthen iShares (offering more than 1,700 ETFs globally) and ETF operations, along with the company’s increased focus on the active equity business, are expected to offer support.

BlackRock is expanding its iBonds ETF platform and launching a leveraged loan fund to diversify offerings and aiming to enhance its market position. Further, the company has expanded its business in India by partnering with Jio Financial and operates as an investment adviser in the country. Over the last few years, the company has had nearly 40% of total AUM for clients domiciled outside the United States.

Such product diversification and global expansion efforts are likely to bolster the company’s revenue mix, reduce revenue concentration risk and allow it to serve a broader range of clients, aiding AUM growth. BlackRock’s GAAP revenues witnessed a CAGR of 8.4% over the last five years ended 2025.

BLK’s Encouraging Capital Distributions

As of Dec. 31, 2025, BlackRock had $11.5 billion in cash and cash equivalents while borrowings totaled $12.8 billion. This indicates a solid liquidity position.

The company hikes dividends annually. BlackRock announced a 10% hike in the quarterly dividend to $5.73 per share in January 2026. It increased its dividend five times in the last five years with an annualized dividend growth rate of 5.02%.

Also, the company has a 43% dividend payout ratio, while its peers, Blackstone, Apollo Global and Blue Owl Capital have 93%, 27% and 107% payout ratios, respectively.

BlackRock has a share repurchase plan in place. In January, the company’s board of directors authorized the buyback of an additional 7 million shares under its existing share repurchase program. BlackRock expects to repurchase at least $1.8 billion worth of shares this year, after buying back shares worth $1.6 billion in 2025.

Analyst Sentiments for BLK

Over the past month, the Zacks Consensus Estimate for 2026 and 2027 earnings has remained unchanged at $53.64 and $60.91, respectively, implying growth of 11.5% and 15.4%.

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How to Approach BlackRock Stock Now

In terms of valuation, BLK’s price-to-earnings (P/E) forward 12-months of 17.32X is above the industry's 12.66X. Thus, the stock is expensive. 

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BlackRock is trading at a premium compared with Blackstone, Apollo Global and Blue Owl Capital. 

Further, a steady rise in expenses is a headwind. The company recorded a five-year CAGR of 10.3% (ended 2025), mainly due to higher general and administrative costs and acquisitions completed during the period. Overall costs are expected to remain elevated due to the company’s business expansion plans. Given rising geopolitical risks and foreign currency fluctuations, BlackRock may witness subdued overseas revenues.

Amid growing concerns around private credit, BlackRock appears relatively insulated. As of Dec. 31, 2025, Alternatives (including private markets) accounted for just 3% of its total AUM, limiting direct exposure. Backed by record AUM and ongoing product diversification, the company remains well-positioned. Still, investors should closely monitor how private credit-related risks evolve and assess BlackRock’s strategic response before making fresh investment decisions. Existing shareholders may hold the stock for now.

Currently, BLK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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