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What: Shares of boutique investment bank Greenhill
So what: It was a pretty ugly quarter for Greenhill. Analysts were looking for $0.52 per share in profit during the quarter, and the actual results limped in at $0.06 per share. Unlike bulge-bracket competitors like Goldman Sachs and JPMorgan Chase, Greenhill doesn't have a massive trading arm to juice results and instead relies primarily on advisory fees. And, in particular, the firm has a strong presence in Europe, which has been particularly quiet on the deal-making front lately thanks to the debt crisis. Greenhill's advisory fees in the fourth quarter fell 10% from last year.
Making it all even worse, the company has been adding to its headcount, which bumped up compensation expenses. For the fourth quarter, compensation expenses gobbled up an amazing 73% of the company's revenue.
Now what: The financial advisory business is nothing if not volatile, and it's not all that surprising to see the occasional drastic swing in results. Along with Lazard
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