From Toast to Toasted

When Kruszewski was hired in 1997, some directors balked at his youth. (He was 38 at the time.) But the chairman of the board at that time, George Walker III, the cousin of former president George H. W. Bush, backed Kruszewski. Back then, Stifel had annual revenues of $110 million, 38 offices, and three or four securities analysts. Last year, it had revenue of about $800 million, 152 offices, and 57 analysts covering 700 companies.

Stifel’s leaders stress accessibility and battle red tape. Twin Cities broker Michael Lavine came to Stifel in 2002. As part of the hiring process, he was invited to St. Louis to meet with Kruszewski. Lavine says it’s easier to get through to management at Stifel than at other firms he’s worked for. “Bigger isn’t necessarily better,” he says. “You had to get through a maze of people. Eventually, you might get the secretary.”

Two additional acquisitions—Baltimore-based asset management firm Legg Mason Capital Markets in December 2005, and New Jersey–based financial services firm Ryan Beck & Company, Inc., in February 2007—are driving much of Stifel’s growth. The first deal included Legg Mason’s investment banking, research, equity sales, trading, and taxable fixed-income sales, all mostly in Baltimore. The second gave Stifel a substantial network of brokers in the mid-Atlantic region. Stifel also bought a St. Louis bank, which it rebranded as Stifel Bank & Trust, in 2006.

Keefe Bruyette & Woods forecasts revenue for Stifel of $993 million in 2008. Its report disputes the idea that Stifel’s stock price already takes into account the good news about the company’s prospects. Keefe’s Smith predicts even better days for the stock, citing as the main reason the company’s swing toward diversification. 

What about more deals? “Today, if an opportunity came along, we’d be in a position to take advantage of it,” Kruszewski says. But Smith also notes several risks, including the possibility of a sustained economic downturn. That would slash revenue and profits, and make it tougher for Stifel to absorb the expenses of integrating its acquisitions.

Stifel’s name often gets mangled. Some say “stih-fel.” Others say “sty-fel.” To help set that problem straight, Stifel took out a large ad in the Wall Street Journal, declaring: “It’s pronounced ‘Ste-fuhl.’” Kruszewski says the ad may run here. 

“I believe that the Twin Cities is a fantastic market,” he says. “It’s a smart investment community. I like everything about it except the Vikings.”