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Six months ago, things were going off the rails at Jennings Capital, and the firm faced a tough call on how to right itself.
The boutique securities firm could refocus on what it always did – resources – and revamp its business to ride out the downturn. Or the firm could reinvent itself to try to take advantage of other hot sectors such as technology.
Jennings chose the former, with a few tweaks, and has spent the last four months rebuilding. The firm reconstituted its board, and the board installed new management. There are 15 new names at the firm – some of them old hands who have returned to help turn things around.
There are new heads of trading, sales, research and now, a new head of investment banking in Brian Imrie. He started this week, marking the latest entry on a résumé that includes stops at Morgan Stanley, Credit Suisse, National Bank Financial (where he was co-head of mergers and acquisitions) and finally at KPMG, where he spent three years as global head of mining.
There is also a sense of optimism, something that has been sorely missing for many months at small firms.
The trials of small resource-focused boutiques have been well documented. Last year was the quietest year in a decade for mining M&A. Financings have largely disappeared, as investors burned by big drops in mining stocks are not interested in buying more of them. Energy is doing a bit better, but it is still slow by historical standards. It's a sharp falloff for firms that were among the richest places to work in the boom, and are now among the toughest. The head of the industry association for securities dealers recently termed it an "existential" struggle for firms in Jennings line of work. Some rivals of Jennings have already closed up shop.
The bet at Jennings is that the deal drought cannot last forever, and with fewer competitors around, the firm should take its share. Jennings is well capitalized, executives said this week.
"Our next order of business is doing some business," David McGorman, who took over as head of Jennings in the revamp, said in an interview.
He said the firm had to rebuild because it "ended up losing its focus, it's energy" as the down years started to take their toll.
"Two years of a crappy market can do a lot of things."
And there is a greater sense of optimism now – not just at Jennings, but all around the business – that 2014 will be better than last year.
Mr. Imrie said the firm is working on "a number of promising transactions."
Mining is showing signs of picking up, he said.
"We will see some activity. We are working on enough stuff we can say that with confidence."
Mr. McGorman, who is based in Calgary, is similarly upbeat about energy.
As part of its restructuring, Jennings has broadened its business a bit to try to capitalize on busier sectors where it had people with expertise. For example, it now has analysts covering special situations and non-bank financial stocks. That should generate a little more business on the trading desk should commodity stocks remain moribund.
The firm looked at moving into some of the hot sectors, such as technology and health care, but decided it had missed that opportunity.
"At the end of the day, we were kind of late to the party," said head of research Peter Campbell, who came out of retirement to rejoin Jennings.