Tags: Stifel | investment | bank | SF

Stifel Financial Turns Investment Bank Player

By    |   Tuesday, 20 March 2012 09:08 AM

Stifel Financial (SF), a middle-market investment bank based in St. Louis, is the little investment bank that could. Through a series of well-timed acquisitions, Stifel has given itself the heft to become an important player.

Stifel isn’t as well known as the big boys in its field, Goldman Sachs (GS) and Morgan Stanley (MS), or even as its peer Raymond James Financial (RJF).

Yet it's growing its name. Stifel’s most recent purchases include investment bank stalwart Thomas Weisel Partners Group in 2010 and municipal finance firm Stone & Youngberg last year.

The company garners more than half its revenue from asset management and about 40 percent from more traditional investment banking activity, such as underwriting and financial advisory work for companies, according to Morningstar.

Bearish side

Not everyone is bullish on Stifel. Standard & Poor’s analyst Kenneth Leon has a sell rating on its shares. Yet he sees plenty of positives.

“SF has one of the largest U.S. equity research platforms among U.S. investment banks, and its recent acquisition of Stone and Youngberg reflects management's aggressive growth strategy,” he writes. The company has historically profited from its acquisitions, Leon notes.

“However, SF currently faces headwinds from a difficult market environment for its core businesses,” he cautions. Leon foresees weakness in the environment for mergers and acquisitions and underwriting in coming months.

Stifel produced an annualized return of 18.7 percent over the past three years. The company’s profit dropped 35 percent to $27 million in the fourth quarter from a year earlier. Revenue fell 11 percent to $356.9 million.

Stifel next reports earnings May 16.

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Tuesday, 20 March 2012 09:08 AM
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