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Stifel (SF) to Sell Subsidiary, Boost Operating Efficiency

Zacks Equity Research

Recently, Stifel Financial Corp. SF entered into an agreement to divest its wholly-owned asset management subsidiary, Ziegler Capital Management, LLC, to 1251 Capital Group, Inc. The financial terms of the deal, expected to be closed in the first quarter of 2020, have not been disclosed. The company’s recent action is intented to shed non-profitable businesses to improve operating efficiency.

Ziegler Wealth Management, based in Chicago, IL, managed client assets worth $10.5 billion as of Sep 30, 2019, barring the assets under management balance of Stifel’s private client wealth management business that is not included in the transaction. Also, it generates annual revenues of nearly $29 million.

Stifel had acquired Ziegler in March 2018, with the motive to strengthen its hold in Midwest markets. Also, the transaction added to the company’s advisors count in Arizona, Florida, and Virginia.

Over the past year, shares of Stifel have surged 35.4%, outperforming the industry’s rally of 13.5%.



Other financial institutions that are also resorting to divestitures in order to improve their operating efficiency and shed the less-profitable businesses include Affiliated Managers Group AM, WisdomTree Investments, Inc. WETF, and The PNC Financial Services Group PNC. All three stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stifel’s strategic decisions are in line with its vision of becoming a premier wealth management and investment banking firm. The company has been continuously acquiring companies. This December, it acquired the capital markets business of Canada-based investment banking franchise, GMP Capital Inc. The motive behind this buyout was to expand Stifel’s presence in the Canada.

In October, the company had acquired certain assets of George K. Baum & Company while in July, it closed the buyout of Mooreland Partners — an independent M&A and private capital advisory firm that provides services to the global technology industry.

Stifel’s strong capital position and earnings strength enable it to undertake strategic growth initiatives. Moreover, its diversified sources of revenues are expected to support the company’s financials.

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