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May 3, 2010

New Pali Hires Storm Ticonderoga

By James Ramage

Over the past year, newcomer Ticonderoga Securities has brought in a brigade of trading and research pros as it strives to build an equities and options presence. And a large block of these--13 in all--arrived from Pali Capital, a brokerage that collapsed earlier this year.

Shawn McLoughlin

Ticonderoga's business lines have been growing deliberately, according to the design of its co-founder and chief executive, Shawn McLoughlin. The Pali hires fit the strategy, as much as Ticonderoga fit their needs.

"They believe in what we are doing here," McLoughlin said. They understand that they could probably get better guarantees elsewhere, he added, but recognize that Ticonderoga is building a team for the long haul.

Beyond Pali, talent has arrived in teams from such firms as Newedge (an options team) and Collins Stewart (ADRs and pink sheets). And with them, the firm has more than tripled in size, McLoughlin said.

Last June, McLoughlin acquired Reynders, Gray, a 30-year-old New York-based broker, and inherited a staff of 22. After renaming the firm Ticonderoga Securities, he kept eight; the firm now has 77. On the cash equities side, this breaks down to three traders, 12 sales traders, 10 publishing analysts, five associates and four research salesmen. Ticonderoga has the backing of giant English interdealer broker ICAP.

Ticonderoga's strategy to build an equities desk is based on having solid research. "We felt that to succeed, we'd have to have research lead the way," McLoughlin said. "In this day and age, although you need to have quality execution, we thought you had to have a good, quality research product to get paid."

But research has been just one component of Ticonderoga's expansion over the past year. The firm now offers U.S. equities trading and research, options trading and research, international market making and risk-arbitrage analysis. In the near term, McLoughlin said he wants to start a program desk and risk-arb sales trading. There are also plans over the next six months to add a fixed income desk.

"It won't be the right time to do a lot of business [in fixed income], but it'll be the right time to get talent," he said.

Two years ago, smaller agency brokerages hired people displaced from the bulge bracket firms to grow in staff and services. By the end of last year, though, the trend had reversed. The large investment banks started hiring again, while a shakeout began among smaller execution-only shops. Amid the fallout, firms like Ticonderoga began poaching sales, trading and research pros.

Among the Pali hires, Allen Randolph leads the way as head of institutional sales. He's followed by two institutional salesmen in Larry Darrow and Dennis Leddy. Ticonderoga hired three senior analysts: Christopher Allen, Douglas Sipkin and Stephen East. And the firm brought aboard from Pali two desk analysts, Andrew Lefberg and Jeremy Stovall, as well as two associate analysts, Warren Gardiner and Paul Przybylski. Ticonderoga also hired three sales traders: Robert Flaherty, Barak Shibles and Justin LaSalle-Tarantin.

McLoughlin said that the three former Pali analysts he hired, who cover the financial and the home-building sectors, have already paid dividends.

"They have a wide following," McLoughlin said. "It's allowed us to talk to a lot of accounts and open up a lot of accounts. There's a big difference between being in certain sectors and having really quality analysts in those sectors. It's very easy to hire analysts; it's very difficult to hire good analysts."


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