Monday, December 29, 2008

Viva Le France

Of late I've felt as if I was Beldar Conehead. Over the Holidays I've consumed "mass quantities" of food and swallowed beer by the six-pack. Additionally, I'd feel comfortable saying I too was from France, as Beldar regularly answered, since our politicians are inserting the government into more and more aspects of  corporate America. We may soon be more French than the French.

During this period of uncertainty, social change, and paralysis, I've put some money into an American investment bank with a strong French heritage. Egads! An investment bank?

Lazard, Ltd. [LAZ] is the Bermudian successor to the old Lazard Freres partnerships in New York, London, and, you guessed it, Paris. It's been a public company for several years has an excellent reputation around the world.

Lazard is much more of an old fashioned IB than its larger cousins. They offer advise on M&A, financings, and restructurings and they have a large money management business. The money management business is a straight forward annuity which provides steady revenue. The advice business dispenses expertise without potential conflicts as they aren't in the market with proprietary trading and lending like the big houses and we know how well the big house gameplan has worked lately. So do their customers needing advise. Lazard's banking business is picking up and as the market improves they will take market share.

They have the world's largest restructuring business and, unfortunately, this is going to be a growth area. Lazard is well positioned worldwide to restructure large, complicated bankruptcies. A visit to their website to view a list of their representative transactions and engagements will show the type of worldwide clientele. This will be a growing investment bank while the others delever and shrink. 

At today's pricing I think LAZ is a good buy and I have. I think they can prosper in both bad times and during recoveries. I'm hopeful the market also starts to recognize Lazard's merits and differentiates it from the other I Banks by moving its market cap upward. 

Time to check with my other "parental unit" and see what's for dinner.

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