GHL - better than I thought
This is not - as I initially thought - a dilution move. reuters reported it as a secondary offering. GHL is NOT ISSUING NEW SHARES. rather, employees/founders are cashing out.
http://biz.yahoo.com/prnews/060501/nym244.html?.v=22
"GHL...announced today that it intends to file a registration statement with the Securities and Exchange Commission registering 4,025,000 shares of common stock. All of the shares of common stock to be registered are currently owned and will be offered and sold by current and former managing directors of Greenhill & Co.Greenhill & Co. will not receive any proceeds from the sale of the shares of common stock being registered"
I feel an awful lot better now. I hate dilution moves. This type of thing is to be expected. 75% of GHL is still held by insiders (aka founders). That means that we can expect selloffs as the company matures and allows more institutional ownership.
Keeping a lid on access to shares can drive up stock price - think of Google. Today GOOG is still 30% owned by insiders. And that's after 1 year of massive selling by employees.
What this means for us is that some stock momentum will go away as GHL shares get less exclusive. That's ok. The company tripled earnings and has a VERY LOW 26 P/E. that is lower than LAZ but higher than MS and GS. On the other hand, those companies are growing at a significantly lower rate and continue to see their top deal makers walk away.
GHL's move shakes the investment community hard. In just a couple of years, massive wealth has been transferred to GHL management. Much more than they could have earned at a Goldman Saks. This can only hurt institutions like LAZ and GS and Lehman Brothers as the top rainmakers at these firms leave to follow GHL's path. An exit strategy becomes clear.
This is like Silicon valley in the 90s, where top engineers left larger companies to start up companies and get more money.
Impact #1: Larger companies get distracted. Losing top dealmakers will distract and dull larger companies. This will help focused boutiques like GHL
Impact #2: Big boys will bleed money and talent. As top dealmakers leave the firms, they will take deals away and the financial impact will begin to hit the bottom line. Other talent at the firm may look elsewhere for better opportunities. GHL can cherrypick.
Impact #3: GHL model gets validated. As more boutiques open up, GHL gains credibility. Shift from size to value. GHL as early leader gets biggest boost. Eventually (2~3 years) consolidation of some boutiques. LAZ has $1.7B debt, so consolidation is a problem for them. But not GHL.
http://biz.yahoo.com/prnews/060501/nym244.html?.v=22
"GHL...announced today that it intends to file a registration statement with the Securities and Exchange Commission registering 4,025,000 shares of common stock. All of the shares of common stock to be registered are currently owned and will be offered and sold by current and former managing directors of Greenhill & Co.Greenhill & Co. will not receive any proceeds from the sale of the shares of common stock being registered"
I feel an awful lot better now. I hate dilution moves. This type of thing is to be expected. 75% of GHL is still held by insiders (aka founders). That means that we can expect selloffs as the company matures and allows more institutional ownership.
Keeping a lid on access to shares can drive up stock price - think of Google. Today GOOG is still 30% owned by insiders. And that's after 1 year of massive selling by employees.
What this means for us is that some stock momentum will go away as GHL shares get less exclusive. That's ok. The company tripled earnings and has a VERY LOW 26 P/E. that is lower than LAZ but higher than MS and GS. On the other hand, those companies are growing at a significantly lower rate and continue to see their top deal makers walk away.
GHL's move shakes the investment community hard. In just a couple of years, massive wealth has been transferred to GHL management. Much more than they could have earned at a Goldman Saks. This can only hurt institutions like LAZ and GS and Lehman Brothers as the top rainmakers at these firms leave to follow GHL's path. An exit strategy becomes clear.
This is like Silicon valley in the 90s, where top engineers left larger companies to start up companies and get more money.
Impact #1: Larger companies get distracted. Losing top dealmakers will distract and dull larger companies. This will help focused boutiques like GHL
Impact #2: Big boys will bleed money and talent. As top dealmakers leave the firms, they will take deals away and the financial impact will begin to hit the bottom line. Other talent at the firm may look elsewhere for better opportunities. GHL can cherrypick.
Impact #3: GHL model gets validated. As more boutiques open up, GHL gains credibility. Shift from size to value. GHL as early leader gets biggest boost. Eventually (2~3 years) consolidation of some boutiques. LAZ has $1.7B debt, so consolidation is a problem for them. But not GHL.
posted by Andrew at
8:59 AM
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