ebook essays pieces of the puzzle
Saturday, April 5th, 2014
whatever it is

14 0405 zRCAP

It has been quite a year for RCS Capital (RCAP).  In June, it came public and the stock wallowed around for a while (its market cap is shown in the chart).  Then the action started.  Deal after deal and, eventually, the stock took off.

In case you aren’t aware, RCAP is the brainchild of Nick Schorsch, who cut his teeth in the REIT world, leads American Realty Capital (ARCP), and is determined to make his mark in the broker-dealer arena.

“Industry observers are intrigued with how RCS Capital will integrate its whirlwind of acquisitions and keep advisors happy at the same time,” said a recent article in Financial Advisor.  Those acquisitions are noted on the chart (listed here with approximate values):  the Hatteras Funds (undisclosed), Investors Capital ($53 million), Summit Financial ($49 million), JP Turner ($16 million), and the big one, Cetera Financial ($1.15 billion).

So what does the Street think of all of this?  Good question.  Bloomberg lists just one analyst following it, at JMP, with a “market outperform” rating, yet a target price of $25 for a stock that closed Friday at $38.59.

The Financial Advisor piece and others like it are full of speculation about what Schorsch is up to, with a variety of different interpretations.  One paragraph in that article starts out with, “Whatever RCS Capital’s strategy turns out to be . . .”

That’s interesting, isn’t it?  Whatever it is, the market is buying what Schorsch is selling.  We’ll see if it works out in the end.  (Chart:  Bloomberg terminal.)

chasing complexity

The portfolios of asset owners — retail and institutional — are getting more and more complex in terms of their exposures.  We are chasing complexity — and our understanding lags behind.