Updated from 1 p.m. Thursday was a blockbuster day for Keefe Bruyette & Woods ( KBW). Shares of the New York boutique investment firm jumped 28% in their first day of trading on the New York Stock Exchange. The stock closed at $26.83, after pricing late Wednesday at $21. "It's a very hot deal," says Tim Ghriskey, chief investment officer for Solaris Asset Management. "This is really a quality boutique firm with a great reputation among investors in the financial sector." In a sign of just how strong the institutional demand was for Keefe Bruyette shares, Solaris, with more than $1 billion in assets under management, was allotted only a small amount of stock by the IPO's underwriters. Of course, the total offering itself was pretty small, with just 6.8 million shares being sold. "Shares went to firms that do more volume," says Ghriskey. "There is a big aftermarket interest. But to us it's too much of a jump to get involved at this point, but it's obviously something that we're looking at." So far, the opening day performance of Keefe Bruyette is besting the 22% pop recorded by Evercore on the first day of trading in shares of that investment-banking boutique. The large demand for shares of Keefe Bruyette speaks to the optimism that investors have for investment-banking firms, given the big bucks that the firms are raking in from advising on corporate deals.
Keefe Bruyette's initial public offering "was really an outright alternative to a sale of the company," by providing an opportunity for management and employees to cash-out some of their interest in the firm, says Richard Kelly, the managing director of financial services at Sanders Morris Harris. "It was a smart deal for them. " The 430-employee investment bank -- which focuses on financial services firms -- even upped the ante before heading into its first day of trading. It sold an additional 278,000 shares, bringing the total offering to 6.8 million. The deal raised about $143 million. In the deal, Keefe Bruyette itself sold 3.9 million shares, while the firm's executives, directors and other shareholders sold 2.9 million shares. The firm's net proceeds will be about $82 million. This year has been a mixed bag for the stocks of boutique firms. Investment-banking boutique, Evercore Partners ( EVR - Get Report), which priced its IPO in August at $21 a share, is up 53% for the year. However, shares of Cowen ( COWN - Get Report) didn't do as well. Shares were priced at $16, below the anticipated range, when Cowen did its IPO in July. The stock is currently trading at $15.28. Keefe Bruyette, which is trading on the Big Board, hired VDM Specialists, a unit of Van der Moolen, as its specialist.