Attached files
| file | filename |
|---|---|
| 8-K - 8-K - OPPENHEIMER HOLDINGS INC | opy8-kotherevents.htm |
Oppenheimer Holdings Inc.
Investor Presentation
1
Safe Harbor Statement
This presentation and other written or oral statements made from time to time by representatives of Oppenheimer Holdings Inc.
(the “company”) may contain “forward‐looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward‐looking statements may relate to
such matters as anticipated financial performance, future revenues or earnings, business prospects, new products or services,
anticipated market performance and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward‐looking statements. Forward‐looking statements are neither historical facts nor assurances of future performance.
Instead, they are based only on the company’s current beliefs, expectations and assumptions regarding the future of the
company’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future
conditions. Because forward‐looking statements relate to the future, they are subject to inherent uncertainties, risks and changes
in circumstances that are difficult to predict and many of which are outside of the company’s control. The company cautions that
a variety of factors could cause the company’s actual results to differ materially from the anticipated results or other expectations
expressed in the company’s forwarding‐looking statements. These risks and uncertainties include, but are not limited to, those
risk factors discussed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10‐K for the year ended December 31, 2017
filed with the SEC on March 2, 2018 (the “2017 10‐K”). In addition, important factors that could cause actual results to differ
materially from those in the forward‐looking statements include those factors discussed in Part II, “Item 7. Management’s
Discussion & Analysis of Financial Condition and Results of Operations – Factors Affecting ‘Forward‐Looking Statements’” of the
2017 10‐K. Any forward‐looking statements herein are qualified in their entirety by reference to all such factors discussed in the
2017 10‐K and the company’s other SEC filings. There can be no assurance that the company has correctly or completely
identified and assessed all of the factors affecting the company’s business. Therefore, you should not rely on any of these
forward‐looking statements. Any forward‐looking statement made by the company in this presentation is based only on
information currently available to the company and speaks only as of the date on which it is made. The company does not
undertake any obligation to publicly update or revise any forward‐looking statements, whether written or oral, that may be made
from time to time, whether as a result of new information, future developments or otherwise.
2
Agenda
1. Company Overview
2. Business Segments
3. Financial Overview
1. Company Overview
4
Business Overview
(1) Wealth Management represents the Private Client and Asset Management business segments.
Oppenheimer Snapshot (as of 12/31/17)
Business Mix – 2017 Revenue ($920.3mm)
A Preeminent Wealth Manager and Investment Bank
Listed NYSE Ticker: OPY
Shareholders’ Equity ($mm): $523.9
Market Cap ($mm) – 3/26/18: $345.0
Book Value per Share: $39.55
Tangible Book Value per Share: $26.74
Share Price – 3/26/18: $26.20
2017 Revenue ($mm): $920.3
Employees: 2,992
# of FAs: 1,107
Client Assets under Administration ($bn): $86.9
Assets Under Management ($bn): $28.3
Oppenheimer is a leading investment bank and full‐service investment firm that provides financial services and advice
to high net worth investors, individuals, businesses and institutions.
Wealth Management
Private client services and
asset management solutions
tailored to individuals’ unique
financial objectives
Capital Markets
Investment banking services
and capital markets products
for institutions and
corporations
Wealth
Management(1)
$682.6
74%
Capital Markets
$231.6
25%
Corporate/Other
$6.1
1%
5
History
The Company has successfully built its business upon accretive acquisitions and aims to continue in that tradition
Distinguished Heritage: Long History of Successful Acquisitions
Fahnestock
and Co.
Founded
Oppenheimer & Co.
Founded
Oppenheimer & Co.
acquired by Mercantile
House Holdings, PLC
Fahnestock Viner Holdings
becomes listed on the
NYSE
CIBC acquires
Oppenheimer
A
c
q
u
i
s
i
t
i
o
n
s
Albert Lowenthal becomes
Chairman & CEO of
E.A. Viner & Co.
Buetti Cannon
(6 FAs/1 office)
Laidlaw Adams & Peck
(150 FAs/5 offices)
Fahnestock & Co.
(250 FAs/25 offices
First of Michigan (200
FAs/30 offices)
Josephthal & Co.
(175 FAs/20 offices)
Propp & Co.
(6 FAs/1 office)
Carolan & Co.
(8 FAs/1 office)
BUY & Hold
(1 office)
U.S. Oppenheimer
Private Client Division
and U.S. Oppenheimer
Asset Management
Division from CIBC
(620 FAs, $8.5Bn AUM
and 18 offices)
BC Christopher
(110 FAs and 10 offices)
NY & Foreign Sec
(30 FAs and 1 office)
WH Newbold’s & Son
(125 FAs/11 offices)
Reich & Co.
(125 FAs/6 offices)
Prime Charter
(80 FAs/2 offices)
CIBC Capital Markets
(600 employees, $2Bn
AUA, 12 offices)
Fahnestock Viner Holdings
changes name to Oppenheimer
Holdings Inc.
Oppenheimer formed
Evanston Financial
Corporation (later
OMHHF)
ARS overhang
reduces ability to
do acquisitions
1881 1950 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2008 2009‐2017
Financial Crisis
Sale of Oppenheimer
Multifamily Housing &
Healthcare Finance Inc.
6
Ownership
Institutional (46.6%)(1)
Top 10 institutional holders (~31.7%) of Class A non‐
voting common stock:
– Hotchkis & Wiley Capital Management LLC (~ 7.52%)
– Dimensional Fund Advisors LP (~ 4.49%)
– BlackRock Fund Advisors (~ 4.08%)
– Burgundy Asset Management Ltd. (~ 3.56%)
– The Vanguard Group, Inc. (~ 2.66%)
– Private Capital Management, Inc. (~ 2.62%)
– Greenwich Wealth Management LLC (~ 2.35%)
– Millennium Management LLC (~1.65)
– SSgA Funds Management, Inc. (~ 1.47%)
– AJO LP (~ 1.30%)
Class A Stock – Ownership(1)
For the period from 2015 ‐ 2017, the Company bought
back a total of 1.13 million shares for $19.6 million
– Average price of $17.31 per share (Book Value of
$39.55 at 12/31/17)
(1) Holdings are as of 12/31/17 per forms filed as of 3/15/18.
(2) Proxy Statement on Schedule 14A as of 3/23/18.
Significant Insider Ownership Committed to Firm’s Long Term Success
Corporate BuybacksInsiders(1),(2)
Albert Lowenthal, Chairman/CEO holds:
– Class A – 24.2% of non‐voting common stock
– Class B – 96.4% of voting common stock
Institutional
& Mutual
Fund
Holders
46.6%
Insiders
30.5%
Retail
22.9%
7
Europe
Hong Kong
92 offices in the U.S.
5 international offices
2,992 employees
– 1,107 financial advisors
– 185+ institutional sales professionals
– 30+ senior research analysts
Global Footprint
US London Hong
Kong
Tel Aviv Geneva St.
Helier
Wealth
Management
Institutional
Equities
Fixed Income
Investment
Banking
Research
Strong Presence in the US and Internationally
London, UK
St. Helier, Isle of
Jersey
Geneva, Switzerland
Tel Aviv, Israel
Hong Kong
Shanghai
Beijing
AsiaMiddle East
2. Business Segments
9
57.1 61.0
65.9 63.8 66.7
78.5
0
20
40
60
80
100
2012 2013 2014 2015 2016 2017
1,406 1,388 1,324 1,233 1,158 1,107
80.3
84.6
87.3
78.7
77.2
86.9
70
75
80
85
90
2012 2013 2014 2015 2016 2017
Leading Wealth Management Platform
Wealth Management Services
Retail services:
– Full‐Service Brokerage
– Financial Planning
– Retirement Services
– Research
– Corporate & Executive Services
– Trust Services
– Margin & Securities Lending
Advisory Services:
– Investment Policy Design & Implementation
– Asset Allocation & Portfolio Construction
– Research, Diligence & Manager Selection
– Portfolio Monitoring & Reporting
Alternative Asset Management:
– Hedge & Fund‐of‐Funds
– Private Equity
Clients include:
– High‐net‐worth individuals and families
– Corporate executives and businesses
– Endowments, charities and pension plans
Client Assets Under Administration ($bn)
Well recognized brand and one of the few independent, non‐bank broker‐dealers with full service capabilities
# of FA’s
Client Assets per Financial Advisor ($mm)
10
Wealth Management Metrics
4Q‐17 Distribution of AUM ($28.3bn) OAM Program Descriptions
Alternative Investments: offers accredited and/or qualified investors the
opportunity to participate in range of non‐traditional investment strategies
Consulting: third‐party managed fee‐based programs
OIA (Oppenheimer Investment Advisers): taxable and non‐taxable fixed income
portfolio management
Omega: FA discretionary fee‐based investment management program
PAS (Portfolio Advisory Services): strategic asset allocation program utilizing
mutual funds as investment vehicle
Preference: fee‐based non‐discretionary advisory account
FAM (Fahnestock Asset Management): discretionary and non‐discretionary
investment management services
Alpha: commission‐based investment advisory where selected FAs exercise
investment discretion over client portfolios
OIM (Oppenheimer Investment Management): provides fixed income solutions
to institutional investors
Advisory Fees as a Percentage of Wealth Management Advisory Fees and Commissions
Increasing Shift to Fee Based Revenue
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$0
$100
$200
$300
$400
$500
$600
$700
2012 2013 2014 2015 2016 2017
M
i
l
l
i
o
n
s
Advisory Fees ‐ Asset Management Total Commissions Advisory Fees % of Total
Consulting
27%
OIA
5%
Omega
13%Other
1%
PAS
17%
Preference
17%
FAM
4%
Alpha
3%
OIM
2%
Alternative
Investments
11%
11
Capital Markets Overview
Summary
Capital Markets segment includes:
– Institutional Equities
• Sales & Trading
• Equity Research
• Corporate Access
– Investment Banking
• Mergers & Acquisitions
• Equity Capital Markets
• Debt Capital Markets
• Restructuring & Special Situations
– Global Fixed Income
• Taxable Fixed Income
• Non‐Taxable Fixed Income
• Pubic Finance
Target Markets
A leading capital markets business providing sophisticated investment banking, research and trading solutions
Breakdown of Revenue 2017 ($231.6mm)
Emerging growth and middle‐market businesses in the
U.S., Europe, Israel and China
Industry Focus:
– Business Services
– Consumer
– Technology, Media & Communications
– Healthcare
– Transportation & Logistics
– Energy
$113.1
48%
$43.8
19%
$73.6
32%
Institutional Equities
Investment Banking
Global Fixed Income
3. Financial Overview
13
2017 Summary Operating Results
* Percentage not meaningful.
($in thousands) For the 12‐Months Ended
REVENUE 12/31/2017 12/31/2016 % Change
Commissions $ 336,620 $ 377,317 ‐10.8%
Advisory fees 320,746 269,119 19.2%
Investment banking 78,215 81,011 ‐3.5%
Interest 48,498 47,649 1.8%
Principal transactions, net 23,273 20,481 13.6%
Other 112,986 62,202 81.6%
Total revenue 920,338 857,779 7.3%
EXPENSES
Compensation and related expenses 602,138 584,710 3.0%
Non‐Compensation related expenses 298,464 294,961 1.2%
Total Expenses 900,602 879,671 2.4%
Income (Loss) before income taxes from continuing operations 19,736 (21,892) *
Income taxes (2,134) (12,262) ‐82.6%
Net income (loss) from continuing operations 21,870 (9,630) *
Net income from discontinued operations 1,130 10,121 ‐88.8%
Net income (loss) 23,000 491 *
Less net income attributable to non‐controlling interest, net of tax 184 1,652 ‐88.9%
Net income (loss) attributable to Oppenheimer Holdings Inc. $ 22,816 $ (1,161) *
14
Capital Structure
Conservative Risk Profile
Straight‐forward balance sheet
Strong capital base
Regulatory Net Capital of $142 million
Regulatory Excess Net Capital of $121.7 million
Level 3 assets represent 4.6% of total assets
(primarily ARS)
As of December 31, 2017 ($in thousands)
Total Assets: $2,438,517
Stockholders’ Equity:
Long‐Term Debt:
$523,911
$200,000
Total Capitalization: $723,911
Ratios
Equity to Assets: 21.5%
Capitalization to Assets: 29.7%
Debt to Equity 38.2%
Gross Leverage Ratio(1): 4.7x
(1) Total Assets divided by Total Shareholders’ Equity.
Value‐at‐Risk (VaR) ($in thousands)
Conservative risk profile with strong balance sheet
772 806
657
597
658
1,229
690
963
855 852
732
502
‐
200
400
600
800
1,000
1,200
1,400
1Q‐152Q‐153Q‐154Q‐151Q‐162Q‐163Q‐164Q‐161Q‐172Q‐173Q‐174Q‐17
15
Interest Rate Sensitivity
Interest and Fee Revenues ($mm)
Firm’s interest rate sensitive products:
– Cash sweep balances
– Margin lending
– Spread lending (Securities Lending and Repos)
– Firm investments (ARS)
FDIC Insured Bank Deposit program had balance of $6.7 billion at 12/31/17
Average customer margin debits were $829.8 million for 2017
Beginning to see the benefit in rising rate environment
Interest and Fee Revenues ($mm)
$111.4
$89.7
$45.5
$37.7 $33.8 $35.1 $35.5 $37.3
$41.4
$62.8
$108.2
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
$0
$20
$40
$60
$80
$100
$120
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
FDIC Money Market Product
Money Fund Sweep Program
Margin Interest
Fed Funds Target
16
Auction Rate Securities
Client ($bn) Company ($mm)
*Since year‐end, the ARS principal balance has been reduced by approximately $25 million due to issuer redemptions and tender offers
ARS failed in February 2008 with over $330 billion outstanding in market
Oppenheimer clients held $2.8 billion in February 2008
Settlements with New York Attorney General and Massachusetts Securities Division in February 2010
ARS purchased from clients under regulatory settlements totals $126.7 million through December 31, 2017
ARS purchased from clients under legal settlements and awards totaled $92.9 million through December 31, 2017
Eligible investors for future buybacks under the settlements with the regulators held approximately $25.3 million of ARS as of
December 31, 2017
Commitments to purchase under legal settlements and awards as of December 31, 2017 were $11.0 million
ARS Holdings
Client ARS exposure significantly reduced
$2.79
$1.30
$0.85
$0.58
$0.30 $0.24 $0.194 $0.167 $0.113 $0.086
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Feb‐08 2009 2010 2011 2012 2013 2014 2015 2016 2017
$5.3 $4.5
$36.7
$70.4
$77.1
$91.6
$98.6
$92.0
$88.1
$113.9
$0
$20
$40
$60
$80
$100
$120
Feb‐08 2009 2010 2011 2012 2013 2014 2015 2016 2017
*
