Siebert Financial Corp. (NASDAQ: SIEB): How The Gebbias Turned $12.65 Million Into $235 Million – In A Year

Of course, the blockchain, the current flavour of the investing season, helped. But read on.

Gloria Gebbia paid $12.65 million to acquire about 91% of Siebert Financial Corp. (NASDAQ: SIEB), in December 2016 for $0.66 per share.

Siebert Financial is the owner of Muriel Siebert & Co, Inc, the broker-dealer founded in 1967 by the late Muriel F. “Mickie” Siebert, the first woman to own a seat on the New York Stock Exchange and the first woman to head a NYSE member firm. Through its Siebert Investment Advisors business unit, it also serves as a registered investment advisor.

Muriel Siebert passed away in 2013. Revenue at Siebert fell from $ 14.03 million in 2014 to $ 9.8 million in 2016. Net loss for 2016 was $ 5.6 million, down from $ 6.6 million in 2014. In October 2016, shares were down to $ 1.21.

Siebert Financial Corp. (NASDAQ: SIEB): Gebbias In The Saddle

There was a visible turnaround at Siebert with Gloria Gebbia in charge. She is the owner and managing member of Kennedy Cabot Acquisition, the vehicle which acquired the shares in Siebert from the selling shareholders.

  30-09-2017 30-06-2017 31-03-2017 31-12-2016 30-09-2016
Relevant Numbers (Quarterly)          
Revenues (mil) 3.09 2.69 2.38 2.63 2.22
Revenue Growth (%YOY) 38.96 9.22 -4.76 -7.17 -12.34
Earnings (mil) 1 0.37 0.06 -3.21 -1.14
Earnings Growth (%YOY) 187.81 150.14 111.58 -19956.25 -60.79
Margin (%) 32.41 13.57 2.44 -122.06 -51.28
EPS 0.05 0.02 0 -0.15 -0.05
Return on Equity (%) 25.15 11.07 2.16 -41.23 -8.21
Return on Assets (%) 91.17 40.52 6.43 -138.17 -29.87

(Source: Capital Cube)

As can be seen from the above table, revenue surged by 39% and earnings swung from $ -1.14 million to + $ 1 million.

By May 2017, barely six months after the acquisition, shares had shot up to $ 4.30. The Gebbias were already up 551% on their investment in Siebert at $0.66 a share.

Siebert Financial Corp. (NASDAQ: SIEB): Who Are The Gebbias Anyway?

John Gebbia came to own a chunk of stock in discount brokerage firm Kennedy Cabot after a Wall Street stint of about 30 years. He bought out the other partners in 1991 and moved the business to California.

He sold Kennedy Cabot to Toronto-Dominion Bank in 1997 for $ 155 million.

According to a year 2000 media report, the family was looking to invest about $ 80 million out of the sale money in the production of movies, and the rest in a brokerage firm to be acquired. The family was much in the limelight after Carlton Gebbia starred in the “Real Housewives of Beverly Hills” show.

Currently, Gloria Gebbia and her family are the majority owner of StockCross Financial Services Inc, a broker-dealer member of FINRA, and having offices across the US.

In 2010, FINRA awarded an elderly investor, David Wolfson, $1.6 million in a case involving StockCross Financial Services for alleged elder abuse. Mr. Wolfson accused StockCross, along with two of its brokers, of misconduct and self-dealing.

In 2015, FINRA levied a fine of $ 800,000 on StockCross Financial Services for engaging in naked shortselling.

In a transaction that is scheduled to be closed in Q4 of 2017, Siebert is to acquire approximately $3.8 billion in customer assets of the retail securities business of StockCross, and the transfer of its nationwide sales force.

Siebert Financial Corp. (NASDAQ: SIEB): Blockchain, The Real Kicker

What has really galvanised the shares of Siebert is the December 14, 2017, announcement by Siebert that it had signed a letter of intent with Overstock.com (OSTK:NASDAQ), and its subsidiary tZERO to enter into a partnership to offer deeply discounted online trading in the first quarter of 2018 upon closure of the transaction. The discounted trades, at $ 2.99 each, would be made available through the Muriel Siebert & Co. Inc. portal at Overstock.

“While maintaining the industry’s deepest discounts for online trading, this partnership plans to introduce the rollout of new products and services such as Blockchain Trading, Crypto Products, and Robo Advisory, along with Free IRA products,” the release said.

On the whisper of the magic words ‘blockchain’ and ‘crypto products,’ shares of Siebert went parabolic, rather, vertical upon the announcement, more than doubling from their previous close. Shares ended Thursday at $ 11.85, also the best level of the day, with the highest volumes seen since 1999.

In a previous article on this website on Overstock and tZERO we talked about how all stocks could become digital tokens that could be traded instantly and without intermediaries on the underlying blockchain ledger. This could ultimately reduce the current costs of trading by upto 90%.

No wonder then that Siebert’s offers of ultra-discounted trades are probably seeking a home on Overstock’s tZERO blockchain based platform.

It is also no coincidence that Morgan Stanley has recently taken an 11.4% stake in Overstock.

Coming back to the Gebbias, the massive spike in the share price on Thursday catapulted the market cap of Siebert to about $258 million, valuing their 91% stake at $235 million.

On an investment of $12.65 million, that’s a neat paper profit of over $222 million, in just a year.

 

 

 

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