In a new 13G filing with the Securities and Exchange Commission, Steven Cohen’s Point72 Asset Management disclosed a 5.4% stake in Houlihan Lokey Inc. (NYSE:HLI), consisting of 569,640 Class A shares. The investment banking company went public last week by offering 10.5 million shares to the public at an IPO price of $21 apiece.
Point72 Asset Management LP is a family office that manages the assets of its founder Steven A. Cohen. The investment firm is a successor of Cohen’s SAC Capital Advisors, which stopped managing money for outside investors a year ago after charges of insider trading. SAC Capital had been among the most successful hedge funds, delivering an average annual return in the range of 25% to 30% over a period of more than 20 years. Point72 Asset Management mainly focuses its strategy on long/short equities, but also makes substantial quantitative and macro investments. As stated by its 13F filing for the June quarter, Point72 manages a public equity portfolio worth $14.44 billion.
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Houlihan Lokey Inc. (NYSE:HLI) is a Los Angeles boutique investment bank that has advised some of the most noteworthy debt restructurings, including the bankruptcies of Enron Corp., Lehman Bros. Holdings Inc. and WorldCom Inc., to name just a few. Besides advising on corporate bankruptcies and restructurings, the company also advises corporate mergers and acquisitions, and other related transactions. As already mentioned, the investment banking company went public on August 13 with an IPO price of $21 per share and began trading under the ticker symbol “HLI”. It’s worth noting that the IPO was priced below the range of $22-$24 a share that the company had previously anticipated. However, the stock rapidly went up during its first trading session and closed at $22.40 per share.
Houlihan Lokey did not receive any proceeds from the offering, as the Class A common shares were actually sold by the investment bank’s major owners: Orix USA, which is the U.S. branch of the Japanese investment conglomerate Orix Corp., and the bank’s executives and directors. Meanwhile, the aforementioned owners will still continue to run the bank and will hold Class B shares, which have greater voting rights than the Class A stock. Raising capital was not the reason of the IPO, as the company itself did not receive any proceeds from the public offering; the company is seeking for more recognition which is expected to boost its activities and attract more clients.
Houlihan Lokey’s Corporate Finance group is considered the leading M&A and capital markets advisor for mid-cap transactions, as it was named the top M&A advisor for United States transactions below $5 billion in 2014. The company’s business is a strong cash-flow generator, delivering fee revenue of $680.87 million in its fiscal year that ended March 31, higher than the revenue of $592.48 million reported in 2014. At the same time, Houlihan Lokey’s net income for 2014 reached $79.9 million, increasing from $61.32 million reported in 2014.
The investment banking firm currently owns 17 offices across the globe and has three additional offices through its joint ventures, which will allow the company to expand into new geographies both organically and through mergers and acquisitions. The company has actually expressed its desire to expand its geographic scope into the regions that are likely to spur growth for the company in the future. Earlier this year, Houlihan Lockey announced a joint venture in Australia that was set to pursue advisory activities in the region, which backs up the company’s current expansion plans.
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