Formerly private equity firms irk stock analysts

By Jonathan Keehner and Anupreeta Das

NEW YORK, July 26 (Reuters) - Pity the poor analyst covering newly public hedge funds and private equity firms.

Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz) and a gaggle of other "alternative investment" firms are descending on public markets with equity offerings, putting billions of dollars in the hands of retail and institutional investors.

That should make them good candidates to be followed by equity analysts advising investors on whether they are worth buying or not, based on earnings and other measures.

But more than most listed companies, these formerly private firms are keeping operations veiled -- to the frustration of shareholders and analysts.

"To make private equity -- and arguably hedge funds -- work, you've got to keep it confidential," said Sanford Bernstein analyst Brad Hintz. "And if you keep it confidential, the analyst has a very difficult time valuing it."

Insight into Blackstone, which floated common units last month, is limited by a variety of factors. The company will not be required to hold annual meetings, according to filings, and does not plan to provide analysts with earnings forecasts.

Rival private equity firm Kohlberg Kravis Roberts & Co. [KKR.UL] plans similar moves after its own initial public offering, for which it filed earlier this month.

"Traditional analysis for these companies is an oxymoron," said Mike Holland, founder of private investment firm Holland & Co. and a former Blackstone partner. "There is an enormous element of 'trust me' involved in these situations."