BlackRock is certainly one of the most powerful financial firms today.  Not only does it manage $3 trillion dollars for the likes of China Investment Corp., FedEx, Boeing, ExxonMobil, the Federal Reserve, and the California Retirement System, it managers $165 billion in troubled assets for the U.S. government.

Recently, BlackRock even acquired Barclay’s ETF business, Barclays Global Investors and awarded $1.5 billion to its employees in bonuses.  So what makes Barclays so successful?  Risk management.  It has helped the U.S. government manage troubled assets from AIG, Citigroup, Freddie Mac, and Fannie Mae.  In 2007, JPMorgan also hired BlackRock to evaluate the risk of Bear Stearns assets after its bankruptcy.  BlackRock also sells a range of different risk measurement systems, including a system called Aladdin.  Thirty seven major clients use Aladdin to manage the risk of their fixed income portfolios, including BlackRock itself.

What does BlackRock do?  BlackRock manages assets that include equity, fixed-income, hedge, mutual, and cash funds.  It also provides advisory services to corporate pensions and sovereign wealth funds.  In BlackRock’s advisory business, 2,300 people work to serve clients and provide risk management services.  In 2009, the company may net $980 million on $4.3 billion in revenue.  That is a net margin of almost 25%.  It is certainly a fantastic business.

Most of BlackRock’s fixed income business consists of relative value managers, who look to exploit differences in spreads between corporate securities, Treasuries, and mortgages, depending on the risk-return properties of each.

Who runs BlackRock?  BlackRock is run by Larry Fink, a former bond trader for Credit Suisse First Boston (CSFB) in the 1970s.  He helped create the mortgage securities trading business.  He joined BlackRock, after the firm was spun off from Blackstone in 1988.  The firm went public in 1999, when the seven original cofounders, including Fink cashed out.

BlackRock also has 425 portfolio managers around the world.  It is certainly a fantastic place to begin one’s career!

For more information, please refer to Forbes magazine…

~I.S.