Category Archives: RAI

Oppenheimer Reiterates “Buy”, Raises PT On Eaton Corp (ETN)

Oppenheimer reported on Tuesday that it is maintaining an “Outperform” rating on the Ohio-based power management company Eaton Corp (ETN), but went on to raise its price target for the stock.

After meeting with Eaton’s management team, analyst Christopher Glynn reported some encouraging prospects for the company. Glynn noted that, “Near-term capital allocation priorities remain reducing debt incurred from the Cooper deal, with no significant acquisitions expected until integration is complete (~2 years remaining). ETN has deployed 50 full time acquisition integration team members to accelerate CBE progress, and thus lacks the resources to adequately pursue additional large deals.” Given the improving outlook, Oppenheimer raised its price target on the company from $73 to $78.

Eaton Corp shares traded higher on Tuesday, gaining 1.35% on the day. The stock is up 30% YTD.

$3.2 Million Team Comes Back to Securities America

Securities America said early Tuesday that an advisor team led by Wayne Maier has returned to the broker-dealer, after spending the past six years with National Planning Corp.

Maier says that he and the five other reps on his team do more than $3.2 million in yearly fees and commission. They manage about $250 million in client assets and work on $200 million of retirement plan assets, as well, from their Bay City, Mich., office.

“We left because we thought we had unique opportunities at National Planning Corp.,” said Maier in an interview with ThinkAdvisor. “The cultural differences between a Midwest broker-dealer and a California company were something we were not prepared for.”

Maier adds that NPC is “phenomenal” to work with and “did nothing wrong.”  His team “was just not used to the fast-paced culture, so things didn’t mesh well.”

About a year ago, he reached out to Securities America, which was acquired by Ladenburg Thalmann (LTS) in 2011 from Ameriprise (AMP) and has about 1,750 advisors. Maier also discussed his situation and desire to move with several other broker-dealers “to see what was going on in the marketplace.”

Maier also stayed in touch with several executives at Securities America and discussed his plans to make a move with clients.

“We are pleased to have Wayne back, he is a great advisor who takes care of his clients, and he and his staff are consummate professionals,” said Gregg Johnson, senior vice president of branch office development and acquisitions for Securities America, in an interview.

“We think this sends a signal to those reps that have left for various reasons in past … of the value in what we are doing and improvements we continue t to make,” Johnson said. “It’s a strong signal to existing advisors, as well.”

(In June, advisors Shannon Case and Mark Slattery, who had left to affiliate with SII Investments from 2006-2013, came back to Securitiies America.)

Securities America recruited advisors with about $35 million in trailing-12-month fees and commissions last year. This included 320 advisors and staff, helping make 2012 the firm’s fourth best in its past 29 years of recruiting, he says.

Forward Focus

As for this year, the BD is “on pace and cautiously optimistic that we can top last year’s results by 15% to 20% in terms of fees and commissions,” according to Johnson.

A key reason for this boost, he says, is that that Ladenburg Thalmann gives the broker-dealer access to asset management, investment banking, trust services and a fixed-income desk.

“The market sees the quality broker-dealer that Securities America is, and with the stable ownership and what Ladenburg Thalmann brings with it – in terms of additional products and services,” said Johnson. “We have lots of interest and traction in the market.”

Another boost is coming from advisors who feel they may have “outgrown their broker-dealer” and are looking for a partner to give them coaching and other tools to “take them to next level,” the executive notes.

But advisors don’t want a BD that’s “so large or growing to a size that means advisors are not getting same level of attention, care and service they want,” he says.

Johnson, an Iowa native, says that Securities America is indeed proud of its Midwest-based culture, but it is growing on the East and West Coasts, as well.  It’s also proud of the fact that it was one of the first BDs to allow hybrid RIAs to join.

“We have always fostered RIAs,” he said. “It goes hand in hand with supporting the passion that advisors have to run their practices as they see fit.”

In July, Securities America teamed with NorthStar Financial Services Group to form Arbor Point Advisors, a joint venture that aims to “fill the gap” for independent advisors looking to operate via a hybrid-business model with a choice of custodial firms and without the need to run their own RIA.

The broker-dealer also hired three regional directors to focus on recruiting in New England, other parts of the Northeast and the Northwest.

The Deal: Blackstone’s Hilton Chain Checks Out $1.25B IPO

NEW YORK (TheStreet) — Blackstone Group (BX) is taking hotel operator Hilton Worldwide Holdings public in an IPO that is expected to raise up to $1.25 billion, according to a Thursday, Sept. 12, regulatory filing.

McLean, Va.-based Hilton owns and franchises a portfolio of 4,041 hotels in 90 countries and territories. The company’s brands include Waldorf Astoria, Conrad, DoubleTree, Embassy Suites, Hilton Garden Inn, Hampton Inn and Homewood Suites.

An eventual exit from the hotel chain will be something of a turnaround story, since Blackstone took Hilton private in October 2007 in a leveraged buyout worth $26 billion, right before the end of the LBO boom and as the recession was beginning to get under way.

Indeed, in 2008, the chain posted an operating loss of $4.5 billion. But with Blackstone at the helm, Hilton increased the number of its rooms by 34% or 170,000 rooms by June 2013 over the number it had in June 2007; grew the number of rooms in the development pipeline by 52% to 176,000 and increased the total number of rooms under construction by 121% to 92,000, according to the offering prospectus. The company posted 2012 adjusted Ebitda of $2 billion on revenue of $9.3 billion, up from adjusted Ebitda of $1.8 billion on revenue of $8.9 billion in 2011. The number of shares to be offered has not yet been fixed, nor did Blackstone indicate if it would sell shares. The filing does not disclose how many shares will be sold in the offering. It does not indicate how many shares Blackstone would sell in the offering either. Hilton said that proceeds would go toward paying down debt. As of the end of 2012, the company had long-term debt of $15.2 billion, down slightly from $16bn in 2011. However, given positive trends in the hospitality industry and the company’s own efforts to streamline its operations, Hilton’s initial public offering is expected to be welcomed with open arms. “Industry trends have been solid over the past several years, so the timing of the IPO is not surprising,” said an industry source who did not want to be named.

In fact, according to industry intelligence firm PKF Hospitality Research, or revenue per available room in the U.S., where 78% of Hilton’s rooms are located, will grow 7.2% in 2014 and 8.1% in 2015.

“Hotel stocks are trading at more or less 12 times enterprise value to projected 2014 Ebitda. Hilton should be there or even higher given its positive evolution,” the person said.

Hilton is not the only hotel company Blackstone is expected to take public. In July, Charlotte, N.C.-based Extended Stay America Inc. filed for a $100 million IPO. Private equity firms Blackstone and Centerbridge Partners LP and hedge fund firm Paulson & Co. acquired Extended Stay out of bankruptcy in 2010 for $3.9 million. Deutsche Bank AG, Goldman, Sachs & Co. and JPMorgan are the joint bookrunners on that deal.

IPO intelligence firm Renaissance Capital said the $100 million figure is likely a placeholder and that Extended Stay could raise between $500 million and $1 billion in the offering. So far this year, the performance of publicly traded hotel chains has been on an upward trend. Marriott International (MAR) share price has increased 10.8%, Hyatt Hotels’ (H) is up 16.6% and Starwood Hotels & Resorts Worldwide’s (HOT) is up 15.9%. Deutsche Bank, Goldman Sachs & Co., Bank of America Merrill Lynch and Morgan Stanley are the joint bookrunners on Hilton’s IPO. An exchange and ticker symbol for the public company have not yet been chosen. — Written by Taina Rosa in New York