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Wednesday, February 13, 2013

What does BlackRock’s CFO Shift Mean?

Reported by Tommy Fernandez

So, Blackrock [profile] is switching chief financial officers.

The fund goliath has hired Gary Shedlin , formerly Morgan Stanley’s vice chairman for investment banking and managing director in the financial institutions group. According to the company Shedlin has more than 25-years of experience advising companies in the financial services sector including stints as chairman of the financial institutions group at Citigroup and managing director and co-head of the Financial Institutions Group at Lazard.

He replaces Ann Marie Petach, who is moving to BlackRock Solutions as senior managing director in the Client Solutions business, “where she will help to develop critical client relationships and business initiatives with a special focus on solutions offerings for public and private pension funds,” according to a company press release.

According to the press release, Shedlin has a long history advising Blackrock.

Does this mean Blackrock is catching acquisition fever?

Blackrock outright denies this in a story published by Reuters.

Should we buy this? On the one hand, the company has completed two major ETF deals in the past 12-months: the purchase of of Canadian ETF shop Claymore to create iShares Canada and the recently closed purchase of Credit Suisse’sEuropean ETF business. The company clearly has shown an appetite for smaller ETF sponsors, and not all shops have demonstrated a mastery of these deceptively simple-looking index products.

On the other hand, Blackrock has expressed concerted plans for organically crushing its competition on numerous occasions. For example, during a recent earnings call chief executive Larry Fink displayed an Alexander the Great-level of appetite for world conquest.

For example, the company is planning massive education campaignsand aggressive initiatives pushing its iShares alpha solution products.

Blackrock already set the foundation for a major organic growth push last October when it reorganized its sales force. It is now setting the stage for future fee battles by re-examining its relations with its indexers.

One important question to ask: Is there any area where Blackrock can’t do immense an amount of competitive damage organically?

If such a niche indeed exists, then maybe that could be a place for Blackrock acquisition fever.  

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