RECORD STOCK SALES A BOON FOR INVESTMENT BANKS

As corporations pour stock on the investing public at a record pace the beneficiaries of this dilution are the underwriters.  The conspiracy theorists and Goldman Sachs lovers are going to hate this fact.  Oppenheimer is expecting record levels of secondary underwriting this quarter after mass dilutions.  Expect the I-banks to once again benefit from the public’s dilution and losses….

Bloomberg reports:

July 2 (Bloomberg) — “Equity underwriting returned in spades” during the second quarter and lifted earnings at U.S. investment banks, according to Chris Kotowski, an analyst at Oppenheimer & Co.

The CHART OF THE DAY shows U.S. underwriting amounted to $122.6 billion, a ninefold surge from the first quarter, by his estimate. The total was more than double the quarterly average since 2005, based on data from Dealogic that Kotowski cited today in a report.

Revenue from investment-banking fees probably climbed about 20 percent from the first quarter because of the pickup in stock sales, the report said. Bond underwriting was relatively stable after fees more than doubled in the first quarter, he added.

“Investors should skew their financial holdings toward investment banks,” he wrote. Returns on equity, a profitability gauge, are likely to return to normal much sooner at these firms than at most commercial banks, he added… [continue here].