Schwab (SCHW) Completes Acquisition of Wasmer Schroeder

Charles Schwab SCHW completed the acquisition of Naples, FL-based Wasmer, Schroeder & Company, LLC. The deal, announced this February, will strengthen Schwab’s position in the brokerage industry.

Following announcement of the deal closure, shares of Schwab gained 1.1%.

Wasmer Schroeder is an independent investment manager of fixed-income separately managed accounts. Its team of more than 60 employees, including roughly 30 investment professionals, has significant experience in the fixed-income markets.

The deal is expected to enhance Schwab’s fixed-income capabilities and expand its approximately $90 billion in separately managed accounts. Also, the company will be able to meet increasing client demand for income in retirement.

However, the financials of the transaction have not been disclosed yet.

At the time of announcement of the deal, Rick Wurster, executive vice president of Schwab Asset Management Solutions, stated, “Wasmer Schroeder’s professionally managed portfolios and investment capabilities will help Schwab deliver on a wide range of fixed income investment needs and preferences, and complements the total wealth management offering we make available to our retail and RIA clients.”

Our Take

Over the past year, Schwab has been undertaking several inorganic moves. Amid a low interest rate environment, its inorganic growth initiatives are expected to boost its market share and enhance profitability over time.

Of the many deals that the company has announced of late, the most prominent is the deal to acquire TD Ameritrade Holding AMTD for nearly $26 billion. This stock and cash transaction will create a behemoth in the online brokerage space. (Read more: Schwab’s Buyout of TD Ameritrade to Shake Up Online Brokerage)

Schwab has also been undertaking efforts to improve trading revenues. For this, it announced commission-free trading in October 2019. Though this will likely lead to a 3-4% decline in quarterly net revenues in the near term, it has helped the company garner significant market share, as evident from a rise in active brokerage accounts since then.

Over the past three months, shares of Schwab have lost 7.5% against the industry’s rise of 13.3%.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of late, there has been a rise in restructuring activities in the finance sector. Last month, Wells Fargo Investment Institute, Inc., the registered investment advisor and wholly-owned subsidiary of Wells Fargo WFC, announced a deal to sell the Global Alternative Investments Feeder Fund Platform to iCapital Network to simplify operations and provide innovative products to the bank’s clients.

Affiliated Managers AMG announced that it will be a minority equity partner to the recently founded San Francisco-based independent investment firm, Inclusive Capital Partners.

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