Stifel Financial (NYSE:SF) is about to release earnings. Follow this Bear Case Scenario:
The recent string of acquisitions may prove very difficult to integrate. The hard work is after the deal is signed.
Increasing leverage at the investment bank and increasing the risk profile of the commercial side will eventually bite. More risk equals more adverse events which need to be sustained. Stifel is non systemically important and will be flushed down the toilet if problems occur.
Stifel has a large wealth management business. Fiduciary responsibility strains will increase as the underwritings pursue more and riskier deals. Wealth management can lose business and key executives very easily.
George Gutowski writes from a caveat emptor perspective.