Get Out Your Shades! The Ramius-Cowen Sun Is Shining on Small I-Banks

The announcement today that privately held Ramius LLC will merge with (and basically buy) Cowen & Co (Nasdaq: COWN, , the mid-market investment bank that was spun out by Societe Generale fairly recently — there was a fairly active feeding frenzy, and at the close, COWN was priced at $6.58, up $1.74, on about 2.1 million shares, raising the market value of COWN to a bit over $99 million.  According to coverage, the Ramius buying group will end up with 71% of the combined entity.

Assuming that the Ramius-Cowen deal is done, and that if you missed it, you missed it — what other small broker/dealers should you be keeping your eye on, or even placing a bet here and there to see who will get snapped up at a premium?  At any rate, it would not be surprising to see some of the comparables gain some points in the afterglow.

So here are few to put in the corner of your screen and keep an eye on.  First of all, we know that NY-based Rodman & Renshaw Capital (Nasdaq: RODM, is horny for a deal, because they tried to buy Cowen themselves a few weeks back — the classic minnow-swallows-whale pipe dream.  But Rodman & Renshaw has been a powerhouse in the PIPE and PE markets for years, has a well-regarded research effort, and is probably undervalued in any rush to find a good broker-dealer to buy.  Their shares were up in today’s rally, and possibly in a bit of sympathy with their one-time dreamgirl, Cowen.  RODM closed at $0.90, up $0.16, on 212,000 shares (vs a normal average of 47,500).  Still ,it is way off its 52-week high of $2.99, so there may be more play in it yet.

In some ways the prettiest girl at this dance is San Francisco-based Merriman Curhan Ford (Nasdaq: MERR,  MERR has a thriving SF-style tech practice, and a very strong greentech presence, having done deals for some of the increasingly common greentech names.  They also have the largest number of PAL relationships on the OTCQX, a high-grade segment of The Pink Sheets where a broker-dealer like MERR can lend a hand to an ADR issuer and collect a hefty fee for the services provided.  MERR shares closed today at $0.50, up $0.08, to arrive at a market cap of just $6.4 million, on a trading volume today of 139,000 shares vs a normal volume of 22,000.  Year-high on the stock was $2.15.  The stock seems to have gained a little luster from the COWN deal.  Ya think? 

Miami-based Ladenburg Thalmann (Amex: LTS; has been an acquiror, having taken on NY healthcare i-bank, Punk Ziegel — but there is nothing to keep a deep-pockets suitor from bidding for LTS itself.  Founded in 1879, LTS can claim to be one of the oldest names on Wall Street, and it has historically dominated a variety of markets.  It is active on both the buy- and sellsides, as well as in capital markets, so in some odd way it could be valued as a company whose parts were worth more than the whole.   LTS closed up $0.01 today at $0.80, vs a 52-week high of $2.59.  It is probably not getting the rays from the Ramius-COWN deal, but may be worth examining on its own merits.

Finally on a quick survey, you may want to have a look at Houston-based Sanders Morris Harris (Nasdaq:SMHG, SMHG has historically had an energy orientation, not surprisingly since they are based in Houston.  But they have done some savvy hiring in healthcare, medical devices, and other broadening segments, to give it access to a wider spectrum of deals in its capital markets operation.  It has launched some newsletters and blogs, and is also making a run at doing some PAL work on ADRs, though not many companies have publicly joined the SMHG stable yet.  SMHG closed today at $5.90, vs a 52-week high of $11.07, on volume of 49,000 shares for a market cap of about $166 million.

If you want to move up and out of the small cap arena, we hear that there is strong nuptial rumor-mongering about some of the midcap banks like BB&T (NYSE:BBT), SunTrust (NYSE: STI) , and Fifth Third (Nasdaq: FITB), but those are outside our bailiwick. 

As usual, we do not recommend stocks; we just write up those that seem newsworthy to us.


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