As we expected, Greenhill’s 3rd quarter earning’s result was weak, missing estimates with a result of $0.06 per share in earnings versus consensus at $0.12 per share. With a current stock dividend yield of 3.7%, and a yield that has never gone above 5.0%, we think we are close to an attractive entry point for GHL shares.
As we articulated in our recent Hedgeye M&A Blackbook, we think the M&A market could have a positive 2014 which would be above Street expectations for the following reasons:
1.) Near record amounts of cash are building up on corporate balance sheets
2.) The U.S. private equity sector has just raised new capital for the first time in 4 years that needs to be invested
3.) That an inflection point in economic activity is being made in Europe which will improve M&A activity there regionally
4.) That the ongoing secular decline in U.S. volatility will spur M&A activity into 2014 as it has done historically
In an improved M&A landscape, Greenhill (GHL) stock would perform very well.