BlackRock's secret sauce?

BlackRock is one of the few financial firms--on the buy-side or the sell-side--that has been able to burnish its reputation through the credit crunch. It's now the world's largest asset management firm. So what's its secret? Does it come down to good old fashioned quantitative analysis?

Wall Street & Technology says this: "At the heart of BlackRock's rise to prominence has been its analytics." BlackRock's solutions technology division develops the firm's analytics and maintains extensive databases, all of which essentially is responsible for the firm's secret sauce. Some see the hiring of BlackRock by the government to help value the complex holdings of several ailing banks and government charter companies, and to perform risk analysis, as validation. Others might argue there was really no one else the government could go with.

BlackRock Solutions employs 1,000 people and is said to be the largest securities and portfolio analytics company in the world. Its flagship Aladdin service started out as in-house analytics engine that eventually was made available to customers. (Aladdin stands for Asset Liability and Debt and Derivatives Investment Network.) Its reputation survived a tricky integration with BGI, and now the unit is more than holding its own.

BlackRock Solutions had $116 million in revenue in the second quarter vs. $100 million a year ago. Much of that is invested into the unit. Internally, people like to call Aladdin an operating system for asset managers. This strikes me as apt. 

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