Curious about what management at Blackstone is thinking right now? Several of the analysts who follow the firm are, too. But it was Bank of America’s Michael Hecht, who won a coveted face-to-face meeting with Blackstone President and COO Hamilton James after the firm’s earnings last month. Hecht’s findings are outlined in a  research note he sent today.

With the credit crunch in full swing, the leveraged buyout market in deep freeze mode, and Blackstone’s stock getting hammered, one might think the sellside is losing faith in the LBO giant. But not Hecht. He sticks with his buy rating and puts on a price target of $38, nearly $15 above where it’s trading right now. Hey, give Hecht credit for sticking with his gut, despite the credit market pressure on firms like Blackstone.

Sure they can spend their money on other types of investments, but Blackstone and other private equity firms will be the first to admit that the big returns and fees in the last few years came through big LBOs, which are dormant. Still, Hecht says the PE business looks good, hedge funds are up, and the firm sees good chances with PIPEs and overseas investing.

Blackstone’s head of public markets, Joan Solotar, was BofA’s director of equity research up until June. Not that this would impact Hecht’s coverage, but it may help explain how he got first crack at James in person following their earnings. Also, BofA makes it clear that it does have an investment banking relationship with Blackstone, specifically as an adviser on Blackstone’s purchase of Hilton Hotels. BofA is hardly alone in having to disclose investment banking relationships with Blackstone.

That is one of the tricky things when mulling sellside research, Wall Street, and Blackstone. The house that Steve Schwarzman built is among the biggest–if not THE biggest–fee payer to Wall Street, so kudos to any analyst brave enough to go bearish on the stock. Yes, “Chinese Walls” exist, but when Blackstone went public, there was only one analyst with the guts to deviate from the pack–Wachovia’s Douglas Sipkin, who rated it a “market perform”. The rest gave the stock either a buy, outperform or overweight rating.

At the time of Blackstone’s IPO, it was easy to be bullish about private equity, given where the LBO cycle was and given Blackstone’s status as a private equity force. But since then, the credit market has frozen over, and Blackstone’s shares have dropped 25 percent. Nevertheless, the Street has stuck by the firm, BofA included.