Stock market sell-offs can be challenging. However, they also often offer great opportunities to buy high-quality stocks at lower valuations. One I found too irresistible to pass up was the recent slump in Blackstone's (BX -1.71%) stock price. I took advantage of the more-than-30% sell-off in the alternative asset manager by adding shares to my portfolio. 

Here's a closer look at why I think Blackstone stock is a great buy these days.

Stability with enormous upside potential

Blackstone is the world's largest alternative asset manager. It had $941 billion of assets under management (AUM) at the end of the third quarter. That makes it much bigger than Brookfield Asset Management (BN 0.34%) and KKR (KKR 0.03%), which have over $750 billion and $491 billion in AUM, respectively. 

A large portion of the company's AUM ($683.8 billion at the end of the second quarter) generates recurring management fees. Overall, it tallied $1 billion of fee-related income in the second quarter and $4.8 billion over the last 12 months. As fee-bearing AUM rises, so do fee-related earnings. They were up 37% and 45%, respectively, in the second quarter.

In addition to fees, Blackstone earns performance revenues as the funds it manages for investors achieve their return objectives. The company generated $1.3 billion of net realizations in the second quarter, up 156% year over year. After subtracting taxes and interest payments, Blackstone generated $2 billion of distributable earnings in the second quarter -- an 86% increase -- bringing its total to $7.9 billion over the past year. Meanwhile, it has accrued another $7.5 billion of performance revenue (up 11%) that it will realize in the future, providing visibility into this more variable revenue stream. Performance revenue could rise sharply as Blackstone's funds mature and deliver on their return objectives for investors.

Blackstone returns most of its earnings to investors. It doesn't make fixed quarterly dividend payments like most other companies, opting instead to pay out the bulk of its distributable earnings through a combination of dividends and share repurchases. Blackstone distributed $1.9 billion to shareholders in the second quarter, pushing its total to $7.9 billion over the past year. While its dividend payments fluctuate, the dividend yield has averaged 5% over the last 12 months. 

Plenty of growth ahead

Investors have steadily increased their allocation to alternative assets over the years to diversify away from the volatile stock and bond markets. Alternative assets under management by companies like Blackstone have grown from $4.1 trillion in 2010 to almost $12 trillion last year. They should continue growing at a healthy pace, with Preqin, a leading alternative asset data provider, estimating that they'll reach $17.2 trillion by 2025, a 9.8% compound annual growth rate. 

Blackstone will likely receive a sizable portion of those assets to manage. Investors are pouring capital into the firm at a higher rate than rivals. Fee-earning AUM jumped 37% to $683.8 million in the second quarter, outpacing Brookfield's 20% increase to $392 billion and KKR's 20% increase to $384 billion. Blackstone grew fee-bearing AUM almost twice as fast even though it has nearly double the AUM base. 

That's due to a couple of factors. Blackstone has been increasingly tapping into individual investors by launching products to meet their needs. For example, it has the largest non-traded real estate investment trust (REIT), with over $69 billion of assets. KKR and Brookfield recently launched non-traded REITs to try catching up to Blackstone. 

As CEO Steve Schwarzman puts it on the second-quarter conference call, the other big growth drivers are "the power of our brand and our superior performance." Blackstone has a long history of delivering differentiated performance for investors. For example, its real estate strategies delivered 9% to 10% returns for investors during the first half of the year. That compares to a 20% decline for publicly traded REITs. The company's ability to deliver strong performance, especially in a down market, is earning it a strong brand reputation, leading more investors to entrust Blackstone with their capital.

Lots of growth and income for a more attractive price

Blackstone is capitalizing on investors' desire to increase their allocation to alternative investments and diversify away from the public stock and bond markets. More investors are choosing to go with Blackstone because of its brand reputation and investing success. That's enabling it to generate rapidly rising fee-based income and performance revenues. It's returning most of that money to investors, which should allow the company to continue growing value for shareholders in the future. With its stock price down, I'm happy to add this investor-friendly stock to my portfolio.