From Toast to Toasted

Key Deal: MJSK

The MJSK purchase was one of four acquisitions Stifel has made since 2005 that have immensely broadened the company’s scope and size. Stifel is also benefiting from its close-knit senior management, substantial employee ownership, and a culture that stresses its aversion to bureaucracy.

This is the cake that Stifel CEO Ron Kruszewski hopes to keep baking to lift his firm’s profile much higher in the Twin Cities. Kruszewski says he’d be disappointed if Stifel doesn’t more than double its current force of 68 Minnesota brokers over the next five years.

Kruszewski, 49, was CEO at Robert W. Baird, a wealth and asset management firm in Milwaukee, when Stifel came calling. Back then, Baird wasn’t vulnerable to the takeovers that were shaking up so many regional broker-dealers, because it was part of giant Northwestern Mutual Life Insurance Company.

Last May, Stifel’s stock shot up 8 percent the day after financial services company Wachovia Securities, LLC, based in North Carolina, announced a pricey deal to buy independent broker-dealer A. G. Edwards. Some thought Stifel would be next. The KBW report concluded that while such a sale was unlikely, Stifel investors could corral as much as $85 a share, a nearly 60 percent premium over its $54 price then.

In a November article in Registered Rep, a magazine for investment professionals, Kruszewski scoffed at the thought that Stifel would be sold. “Merrill Lynch will go before Stifel,” he told the publication. That could be. Merrill is struggling, saddled with the crash of the exotic securities that financed the subprime mortgage boom. Meanwhile, Stifel’s employees own just under half of the company, giving it a measure of protection Baird once enjoyed.

“No one’s going to do anything the employees don’t want to be done,” Kruszewski says.

Growth Kicks In

Stifel directors hired Kruszewski in the wake of a municipal finance bond scandal that started in the late ’80s, bogging the firm down for the next few years. The Securities and Exchange Commission closed the book on its case against Stifel in 1995, after ordering the firm to pay restitution and fines totaling more than $1.2 million for hiding payments from municipal clients to Stifel’s Oklahoma unit. That unit was sold that year.