KBW, Inc. (KBW)

KBW, Inc. is a full service investment bank specializing in the financial services industry. It provides investment banking, sales and trading and research coverage of an extensive range of companies in the financial services industry, insurance, consumer finance, securities and a wide array of products and services. In 2006, it completed its initial public offer generating around $74 millions, which may be used for growth and expansion of business and to fund strategic investments.


In 2006, revenues increased by 32% to $406.6 millions primarily due to higher investment banking income, commission income, interest & dividend income and investment advisory fees. Investment banking and brokerage contribute more or less equally to revenue with marginal contribution from asset management. It one of the few consistent investment banking firm and achieved CAGR of around 18%, over a span of 10 years.


Initial negative impact of huge expansion into European market is over and now it is reaping benefits for company. Encouraged by performance in European market, company has initiated further expansion by assembling an investment banking team in order to target opportunities to participate in transactions for European issuers in both developed and emerging markets.


The company is also expanding its asset management business by broaden its product offerings with aggressive marketing and plans to hire experienced professionals with significant relationships and investment experience. It also plans to expand its other current business by building new product and sector expertise and offering additional value-added services, such as increasing our securities warehouse capabilities.


Due to company’s sector and product breadth, it has more diversified clients than its competitors. Lots of mergers & acquisitions, steady stream of IPOs and follow-ons combined with huge expansion plans make the stock a healthy investment proposition.