Billionaire Steve Schwarzman amassed the bulk of his fortune, estimated at $39 billion, through salary and dividends from Blackstone, according to Forbes.

In 2023, Stephen Schwarzman received a total of $896.7 million, including a salary of $119.7 million and a dividend payment of $777 million. Steve Schwarzman currently owns about 231.9 million shares of Blackstone.

To become one of the highest-paid CEOs in the world , and rise to billionaire status, Stephen Schwarzman has always adhered to a number of investment principles to grow both his personal and corporate portfolios.

Investing in alternative assets

While working at Lehman Brothers in the 1980s, Stephen Schwarzman saw the potential of private equity. “I thought we could raise a lot more money as one of the largest investment firms in the world,” he told Forbes.

"Lehman Brothers' management refused to get into this business, which I think was a very damaging decision for them."

When he founded the company, Stephen Schwarzman made alternative assets (capital) a key part of his investment strategy.

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Stephen Schwarzman became one of the richest billionaires in America simply by managing other people's money.

He said his firm was a pioneer in entering other alternative asset classes such as real estate, hedge funds and credit. His recommendation for investors today is that credit is still an extremely good sector in terms of risk and return.

Diversify your portfolio

For Stephen Schwarzman, diversification is not a one-time strategy, but rather his default investment approach.

The changing world makes it more meaningful to diversify and add new strategies. “There are different sectors that are cyclically undervalued, and getting into that sector will really help our original customers who are using other products,” he said.

Willing to pay a premium for a smart investment

While Stephen Schwarzman often looks for undervalued assets, he is willing to pay a premium if he believes it will pay off. This was the case when he invested in Hilton in 2007.

Blackstone is paying a high price for this, he said, but believes there are at least two very potential opportunities for Hilton to increase profits. With the aggressive plan to open new hotels and consolidate Hilton's three headquarters, he believes he can add $1 billion to the company's profits.

“When we bought the company, although it seemed like a very high price, it was quite appropriate because we knew what we could achieve, and it came true. The deal gave us a total profit of $14 billion, which is a great result,” he said.

Don't act alone

After making a poor investment in a steel company, Stephen Schwarzman realized that he would benefit from consulting others before making final decisions about investment opportunities.

“We have reorganized the way the company makes decisions, instead of relying solely on my opinion. All future decisions will be made by all partners at the company in a unified process. All risk factors must be listed and then thoroughly discussed,” he shared with Forbes.

Blackstone applied that process to almost everything it did and depersonalized the decision-making process. Turning to financial experts helped Stephen Schwarzman make smart investment decisions later on.

Investment analysis at both micro and macro levels

Before investing, it is important to evaluate not only the company but also the industry as a whole. Stephen Schwarzman makes it a habit to consider the key factors involved before making a decision.

According to Stephen Schwarzman, they will first look at the overall drivers of success for the target company. At the same time, they will look for growth opportunities in both the industry and the company. Another important thing to consider is the room for growth at both the micro and macro levels.

Stephen Schwarzman became a billionaire by managing other people's money, so he always has a "big" mindset and is constantly looking for new opportunities. Blackstone has reached nearly $1.1 trillion in assets, but he still feels the need to continue expanding his investment activities and increasing the size of his business.

(According to Forbes)