Friday, September 29, 2006

Security Stocks: Bank On The Bankers

WASHINGTON, D.C. - The presence of bullish investment bankers in a particular business sector is no guarantee of its good health. It sometimes indicates just the opposite. In 2000, for example, bankers at San Francisco’s Robertson Stephens were prospering on dot-com and technology business. The bank folded two years later, victim of a tech market gone abruptly south.

These days, you’ll find plenty of bullishness at a boutique banking outfit with a unit catering to the homeland security industry. John Shaw, president of New York’s Legend Merchant Group, says he expects homeland security to experience “explosive” growth in the coming years. “Our pipeline is rather robust,” adds colleague Scott Greiper, a Legend Merchant principal and head of its homeland security practice, the Convergent Security Group (CSG).

In the investment context, we’ve been troubled on occasion by the possibility of terror bubbles. Here, however, we don’t interpret the happy talk from the i-bankers as a sign of impending bust. In fact, those interested in homeland security stocks and takeover plays should heed arguments from Greiper and his CSG colleagues.

Full story at