Barclays on U.S. Brokers, Asset Managers & Exchanges: Capital Trends: December 2011
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Rating Summary:
4 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 12 | New: 20
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Barclays on U.S. Brokers, Asset Managers & Exchanges: Capital Trends: December 2011
Barclays analyst, Roger A. Freeman, said, "November 2011 delivered sequentially mixed broker-dealer revenues, in our view. With respect to the equity capital markets businesses, we believe revenue generation was mixed in November. Inputs to the month included weaker trading volumes and fairly flat asset prices (quickly round-tripping a decline). Equity underwriting volumes rose sharply sequentially. Given conservative dealer positioning, we do not expect that the rally over the past couple weeks has generated meaningful positive positioning P&L. On a positive note, we have seen volatility decline from recent peaks which may, if accompanied by lower correlation and higher volumes, result in better market making conditions for dealers, though as the seasonally slow year-end period approaches quickly, it may be January before we see notably stronger dealer revenue generation. In fixed income in aggregate, we believe that November core revenue generation was mixed sequentially, though still at relatively subdued levels. Secondary trading volume trends ranged from modestly lower to slightly higher sequentially."
"In investment banking, announced M&A volume in November of $222bn rose 18% from October's levels and was 5% lower than the year ago November 2010. Completed volume of $185bn was 5% lower vs. October and down 11% vs. the year ago November. To the extent they continue, we believe the recent improvement in market conditions may be setting up for stronger announced M&A volumes in coming months. November equity underwriting volume rose nearly 150% sequentially to $42bn, the strongest month since May. The month-over-month gain was driven by more than doublings in each of the underlying major products. That said, on a year-over-year basis, total equity underwriting volume was down 67%,
driven by weaker activity in all three products."
"Heading into the end of the year, we expect sequentially weaker equity underwriting volumes in December. Global debt underwriting volume declined 2% during November to $414bn and was 15% lower than November 2010. Volume during the month was sequentially driven by lower volumes across non-corporate debt issuance, partially offset by stronger IG and HY corporate debt issuance. Corporate investment grade issuance rose 12% sequentially to $167bn (strongest month since May), high yield issuance gained 151% to $29bn (strongest month since May), and combined ABS/MBS volume declined 6% to $52bn."
Some Stocks of Interest Include: TD Ameritrade (Nasdaq: AMTD), E*TRADE (Nasdaq: ETRD), Goldman Sachs (NYSE: GS), JPMorgan (NYSE: JPM), Invesco (NYSE: IVZ), Schwab (Nasdaq: SCHW), Och-Ziff Capital Management (NYSE: OZM), and Fortress Investment Group LLC (NYSE: FIG), Pzena Investment Management Inc (NYSE: PZN) and Diamond Hill Investment Group, (Nasdaq: DHIL).
Barclays analyst, Roger A. Freeman, said, "November 2011 delivered sequentially mixed broker-dealer revenues, in our view. With respect to the equity capital markets businesses, we believe revenue generation was mixed in November. Inputs to the month included weaker trading volumes and fairly flat asset prices (quickly round-tripping a decline). Equity underwriting volumes rose sharply sequentially. Given conservative dealer positioning, we do not expect that the rally over the past couple weeks has generated meaningful positive positioning P&L. On a positive note, we have seen volatility decline from recent peaks which may, if accompanied by lower correlation and higher volumes, result in better market making conditions for dealers, though as the seasonally slow year-end period approaches quickly, it may be January before we see notably stronger dealer revenue generation. In fixed income in aggregate, we believe that November core revenue generation was mixed sequentially, though still at relatively subdued levels. Secondary trading volume trends ranged from modestly lower to slightly higher sequentially."
"In investment banking, announced M&A volume in November of $222bn rose 18% from October's levels and was 5% lower than the year ago November 2010. Completed volume of $185bn was 5% lower vs. October and down 11% vs. the year ago November. To the extent they continue, we believe the recent improvement in market conditions may be setting up for stronger announced M&A volumes in coming months. November equity underwriting volume rose nearly 150% sequentially to $42bn, the strongest month since May. The month-over-month gain was driven by more than doublings in each of the underlying major products. That said, on a year-over-year basis, total equity underwriting volume was down 67%,
driven by weaker activity in all three products."
"Heading into the end of the year, we expect sequentially weaker equity underwriting volumes in December. Global debt underwriting volume declined 2% during November to $414bn and was 15% lower than November 2010. Volume during the month was sequentially driven by lower volumes across non-corporate debt issuance, partially offset by stronger IG and HY corporate debt issuance. Corporate investment grade issuance rose 12% sequentially to $167bn (strongest month since May), high yield issuance gained 151% to $29bn (strongest month since May), and combined ABS/MBS volume declined 6% to $52bn."
Some Stocks of Interest Include: TD Ameritrade (Nasdaq: AMTD), E*TRADE (Nasdaq: ETRD), Goldman Sachs (NYSE: GS), JPMorgan (NYSE: JPM), Invesco (NYSE: IVZ), Schwab (Nasdaq: SCHW), Och-Ziff Capital Management (NYSE: OZM), and Fortress Investment Group LLC (NYSE: FIG), Pzena Investment Management Inc (NYSE: PZN) and Diamond Hill Investment Group, (Nasdaq: DHIL).
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