Despite analysts' rave Fortress, Blackstone plunge

By Anupreeta Das

NEW YORK (Reuters) - Shares of "alternative" asset management firms Fortress Investment Group (FIG.N: Quote, Profile, Research, Stock Buzz) and Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz) have plummeted below their initial offering price despite bullish analysts' ratings.

Private equity firm and hedge fund Fortress's shares were down nearly 8 percent on Wednesday, while Blackstone's were off about 1 percent.

Since Fortress -- the first of these companies to go public -- debuted on the New York Stock Exchange in February, its stock has dropped nearly 50 percent from its initial price of $35, after gaining about 70 percent on the first day.

Analysts from Goldman Sachs, Deutsche Bank, Banc of America Securities and Lehman began covering Fortress on March 21 with "buy" or equivalent ratings. Goldman Sachs and Lehman were the lead underwriters; Banc of America and Deutche Bank were among the co-managers on the offering.

Fortress shares were already down from their initial offering price of $35, a fact many analysts have attributed to the deteriorating home loan and credit markets rather than weak fundamentals.

Deutsche Bank analysts Matthew Fischer and Mike Mayo, who have a $27 price target on Fortress, said "alternative asset management has favorable structural trends that should lead to 20 percent annual growth in this segment."

Deutsche Bank had put its coverage of Fortress on hold because their previous analyst left the firm, but resumed coverage on Wednesday with a "buy" rating.

Goldman Sachs analyst Marc Irizarry said he continues to have a "buy" rating on Fortress stock.