Greenhill Shares Surged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of investment bank Greenhill (NYS: GHL) were hitting a high note today, gaining as much as 11% in intraday trading after the company reported third-quarter earnings.

So what: Unlike its massive competitors like Goldman Sachs (NYS: GS) , JPMorgan Chase (NYS: JPM) , and Morgan Stanley (NYS: MS) , Greenhill doesn't have a traditional banking business or a massive trading arm. Instead, the firm focuses primarily on advisory services. That wasn't a great area to be in during the third quarter as merger and acquisition deal volume declined and capital raising was muted.

But while results did decline in the third quarter, they fell less than analysts were expecting. Earnings per share were $0.28 for the quarter -- down from $0.47 last year -- but analysts were looking for just $0.20.

Now what: With its focus on advisory services -- a business that can swing wildly -- investors shouldn't expect perfectly smooth results from Greenhill. But as far as investment banks go, it's a top-notch shop that doesn't expose investors to many of the regulatory issues that Goldman and its ilk are currently dealing with. Also, with a 5.1% dividend and a pledge to use funds from liquidating its merchant banking business to buy back stock, this is an investment bank that doesn't forget about its shareholders.

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