Why I'm Exiting Greenhill & Co.

We don't have much left of Greenhill & Co (GHL), a smaller boutique type of investment firm - only about a 0.25% exposure. I am going to boot the last piece a few dollars higher than our cost basis and call it a day here (cost was just over $74). I like the company, but Thursday the stock was down 6% as management dumped 3M shares on us. This money was not for any operations, it simply was a way for executives to exit and dilute shareholders. Par for the course for American capitalism, but no need to take the shower on it as a shareholder.

• Investment bank Greenhill & Co. said Thursday it priced a stock offering of 3 million common shares at $76 per share.
• The offering consists of shares now owned by managing directors and senior advisers of New York-based Greenhill. Greenhill will not receive any proceeds from the sale.
• The offer price is a 5.1 percent discount from Wednesday's closing price of $80.09.

The stock has been range-bound for many months, and this sale price is within the middle of the range where it's been vacillating. We have done nothing with it for 2 months now, and I don't see a reason here to rush in, so I'll expunge instead. Earnings were last week

and were nothing special, but the stock held up better than I imagined. As long as belief is capital markets will continue recovering, this type of stock should do well. It is a very rich stock for those who still look at valuation.

• Boutique investment bank Greenhill & Co Inc (GHL) posted a sharply lower second-quarter profit, hurt by a 85 percent slump in merchant banking and other revenue, and completion of fewer large deals.
• The company earned $10.3 million, or 35 cents per share for the period, compared with $28.9 million, or $1.04 per share, a year ago.
• Quarterly revenue at the company, which specializes in deal-advisory work, more than halved to $54.1 million.
• The investment bank has been aggressively hiring the cream of global banking talent as the financial crisis and regulation force large institutions to cut staff and limit pay.

No position

Comments

[elliot_mllr:]

If the issue is a secondary only, with shares being sold by shareholders and no new shares issued by the company, then the existing shareholders are NOT being diluted.

Jul 31 04:05 PM

[Joe Friday:]

The existing shareholders are wise to sell. Anyone that will give them 76 dollars for their shares should have their head examined. This is probably among the most overvalued stocks on the market today.

Jul 31 05:14 PM