New Years Comments Heidrick & Struggles Clear Winner

During the Seasonal Break (Christmas if you do not care for political correctness) I scanned some financial skeptic blog stats for the past year and this is my overall conclusion.

The largest amount of activity was clearly around LDK Solar Company Ltd.(LDK) Regardless of your feelings about the company I think we can all agree that there is controversy and polarized opinion swirling about. In terms of blog posts I only started to comment in the fall of 07. But the activity is easy to understand.

The second place winner is a headhunter called Heidrick & Struggles (HSII). I only wrote one post dated Feb 27, 2007 On an annual weighed basis HSII has been showing up on the radar very consistently only just being beaten out by LDK.

Heidrick & Struggles is not nearly as controversial as LDK. HSII market cap sits at just under $600 million. But hey everyone needs a well paying job and many large companies will consider using Heidrick & Struggles professional services. Their web site claims that the financial services practice is the largest part of the firm.

When you scan Heidrick & Struggles partner and associate bios there is a lot of private equity and hedge fund expertise. As financial services restructures the question becomes will Heidrick & Struggles be able to re-purpose the said expertise. Doors will be revolving and swinging both ways for the next year. The supply and demand dynamics for hot shot managers who can lose large amounts of capital in incredibly short periods of time does not look favourable.

The prognosis on Heidrick & Struggles may be out for a while. I would keep track of professional headcounts and number of offices as a proxy for financial health. The firm is pure intellectual capital (Big commissions) and some fancy office furniture. If the revenue stream is not there the laws of Darwin will apply soon.

The company also initiated a dividend program last Sep 07 at an annual rate of $0.52. The current yield is approximately 1.6%. the new dividend did little to improve the share valuation. Given the high operating costs of a successful search the firm is vulnerable. One last point. There are an awful lot of press releases coming out. Never a good sign.