The Blackstone Group reported a $165.6 million profit for the second quarter, thanks to huge gains in its hedge fund businesses, according to the International Herald Tribune. The private equity firm’s hedge funds reported $225.2 million in revenue, offsetting other gains and large losses, including a pretax loss of $185.5 million.


Blackstone’s biggest deal this year was the nearly $3.5 billion acquisition of the Weather Channel last month, and the purchase of Hilton Hotels the previous summer.


Blackstone executives expect the market volatility to continue, with regional banks continuing to suffer from bad loans. The firm bet against subprime mortgages in 2006 and 2007 and has been investing heavily other areas since then.


“Our bet is that we’re near a bottom,” said Blackstone President Hamilton James.

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