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Von Aldo

LPL Shares: A Buy?

Berstein Research today issued a somewhat equivocating research note on LPL (Ticker: LPLA). Well, in my view anyway. Consider that Brad Hintz notes the company missed his earnings estimates but nevertheless praises the company by saying that the off quarter doesn't diminish "the underlying long-term attractiveness of LPLA."

Senior Analyst Brad Hintz concludes: "LPL dominates the dual licensed independent channel with scale, attractive payouts and excellent technology. Bernstein believes this means that LPL should be able to achieve a growth rate in excess of that of the overall independent channel. And we believe that LPLA should be able to continue to outgrow the industry for the next two years."

But then he rates LPLA shares "market perform."

Hintz also says "new advisors have exhibited about 50% productivity and typically grow 2x faster than LPL's legacy advisors." And that "on average it takes three years for new advisors to ramp up after joining the LPL platform." He also notes that LPL experienced $1bn in net new advisory flows during the quarter, the lowest level in at least 8 quarters."

(True story: Hintz credits Sallie Krawcheck with "saving my life." Why? I asked him. "Because she recruited me to Bernstein. Otherwise I still would have been working at Lehman [where he was CFO] and would have been in my office in the World Trade Center on September 11th.)

These are tough times for financial advisors, well, to be more specific, FAs at wirehouse firms. One wonders: With LPL's mixed results but with its strong business plan (made all the better by its acquisition of Fortigent, which is strong in the RIA space) and the fact that its shares were sold off yesterday, well, one wonders: Is this a buying opportunity?

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