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Greenhill: Some support for my thesis

|Includes: Greenhill & Co., Inc. (GHL)

The announcement today that Greenhill is acting as financial advisor to BJ Services on their announced sale to Baker Hughes is a good sign for two reasons.  First, it supports my view that Greenhill is entering the very top tier of M&A advisors, and second, that their headhunting frenzy is likely to pay off. 

When it was announced that Greenhill was the lead advisor to Roche in its acquisition of Genentech, it was a bombshell.  My view is that over the next few years, we will grow accustomed to seeing the likes of Goldman Sachs on one side of the table and Greenhill on the other.  Greenhill has the business model, talent, and reputation to make that final step.  So this deal was simply a confirming datapoint for my thesis.  Only time will tell for sure.

On the second point, I am assuming that BJ Services was advised by Managing Directors from Greenhill's new Houston office.  I have not confirmed that, but I think it is a safe guess.  Greenhill has been very aggressively adding MDs and offices as it picked off talent from other struggling firms.  I think the flood of resumes is probably slowing as Wall Street stabilizes, and in several cases, returned TARP money.  But the question remains: did Greenhill make good hires?  Again, only time will tell, but I think a good-sized lead advisor role from their new Houston MDs during a slow M&A environment is a good sign.

Disclosures: I currently own Greehill shares based on my thesis that investors will pay just over $100 per share at the end of 2010 because it will be viewed as a high quality way to get pure-play exposure to the M&A cycle as it reaccelerates.  As such, I am willing to sell my shares in the near term at around $90.  I bought the shares at $57.