Raymond James could return to acquisition mode

Raymond James Financial Inc. could return to acquisition mode as post-recession valuations level off, though two of its top executives emphasize that the St. Petersburg-based investment company doesn't have to buy up smaller competitors to grow.

Chief Operating Officer Chet Helck says the recent turnaround on Wall Street could create attractive opportunities for company purchases. Helck attended the Securities Industry and Financial Markets Association's annual meeting in New York earlier this week.

“Today we certainly see the valuations of firms in our industry as more sane than they were in the past,” Helck says in an interview with Reuters TV. “That argues for the fact that there may well be acquisitions that we could complete in the foreseeable future.”

Tom James, chairman of the firm co-founded by his father in 1962, said during Raymond James' earnings conference call Oct. 21 that there were no acquisitions far enough along to announce at that point. The company's most recent purchase was Lane Berry & Co. International LLC, an investment banking firm with offices in Boston and Denver, in May 2009.

“What we look at are mainly tuck-in acquisitions now that add value, and on the asset management side we are still looking for lift-outs and small acquisitions in several specific product areas,” James stated in a transcript provided by Seeking Alpha. He added: “We don't rely on external acquisitions to affect growth here.”

Raymond James' shareholders probably wouldn't mind if the company simply stands pat. Its shares are trading near a 52-week high of $31.25 on the New York Stock Exchange (RJF) and it finished its latest fiscal year with record revenue of at least $2.9 billion, up 14%, along with 49% higher net income of $228.3 million.

In a related note, Helck told Reuters he expected higher pressure on retail investors from the new fiduciary standard under the Dodd-Frank Act. “With increased regulation, there's always an increased cost,” he said, adding that Raymond James has not started budgeting for those costs.