When the meeting is underway, an unusual sound for early morning is heard, the loud, rasping sound of a voice that could slice through stone.
The voice belongs to Brian Finnerty, and he is preparing the troops for the market opening.
The sound is powerful, stirring stuff, putting the traders and the other professionals on a war footing.
Still, the unusually bright winter sun does catch a sleepy eye off-guard, while most of the room, powered by strong coffee and bagels, is deep into research, sales and trading. St. Patrick's Cathedral outside is deep in silent prayer. Radio City Music Hall looks like a doll's house.
Inside, the voice of Finnerty rises even louder. Finally, he reaches the perfect pitch.
"Okay, let's get started," he says, sounding a little hoarse. "Yesterday we had the Dow Jones down 73 points, three-quarters of a percent. Nasdaq was down 11, a half percent. Overseas markets are a mixed bag. Tokyo has actually gone up to the 15,000 mark, which is sort of a pretty big resistance level, up 384 points"
The voice is raspy, but the 30 or so people gathered in the room are listening, taking notes, occasionally nodding approval at some wisdom Finnerty dispenses. Is the man running a country?
No, but Finnerty, who's 49 and a former professional baseball player for the Montreal Expos, is a man of action. Nowadays, Finnerty is a sales trader and in charge of institutional sales and trading at C. E. Unterberg, Tobin in midtown Manhattan.
Off the desk on the 22nd floor in the Swiss Bank Tower, Finnerty has national Wall Street name-recognition as a frequent stock-market commentator on CBS, CNBC, Fox and other television networks.
The power the medium bestows on respected pundits like Finnerty should not be underestimated. Just recently, the stock price of ECCS Inc., a New Jersey-based company specializing in computer-data storage solutions, jumped nearly 100 percent, albeit from a modest $1 1/2 a share to $ 2 7/8 while 1.5 million shares changed hands (the biggest volume traded on any one day most recently).
Moments before the stock price jumped, Finnerty issued a buy recommendation for ECCS Inc., which is traded by C.E. Unterberg, during a question he took from an investor in a television call-in business program. (Mind you, the stock was trading a year earlier at up to $9.)
Uncomplicated Fellow
Finnerty is breathtakingly uncomplicated. In an interview with Traders Magazine, he said his philosophy is simple: "Be yourself and tell the truth, 'cos I'm too stupid to keep track of any lies. Don't take yourself too seriously. Have a bit of fun 'cos it helps the productivity, and remember, knuckle down in moments of stress."
At the same morning meeting at C.E. Unterberg, Finnerty pipes up that some numbers are due out on this bright, winter morning. "No blockbuster numbers, just personal income and new jobless claims," he reminds everyone. "The weekly number comes out at 8:30 this morning. Home sales come out a little later, at ten o'clock."
The voices of the firm's research sales traders and stock analysts then come across the squawk box, some calling from the firm's outpost in San Francisco, each pro bringing forth his or her own golden prognostications and reports. This meeting is a smooth piece of work.
At C.E. Unterberg, Finnerty is a beloved figure known as much for his blarney as for his expert knowledge of Nasdaq small and mid-cap stocks, which are a staple of C.E. Unterberg. (The firm makes markets in about 90 Nasdaq companies, mostly technology issues, and executes from 800 to 1,500 trades daily, including listed business.)
C.E. Unterberg's desk has two position traders, Jeff Moskowitz and John Haun, as well as three institutional sales traders: Susan Riordan, Paul Lyle and Greg Malik. There are two traders' assistants based in New York, Brett Moskowitz and Tripp Warner. On the San Francisco desk there is Dan Hornbuckle, an institutional sales trader.
Getting the Break
Wall Street was not Finnerty's first career choice. In fact, Finnerty was drafted into the farm system of the Montreal Expos after his senior year at New York's Pace University. He graduated in June 1972. Finnerty then spent the next 12 months traveling the highways and byways of upstate New York and Pennsylvania, and during one stretch played 85 straight night games.
"The experience taught me how to be a strong team player and how to make it in the world of competitive sports," he said. "I think trading is like that a lot." Finnerty was dropped by the Expos after 12 months, then turned down an offer to join the Philadelphia Phillies. He instead opted to pursue a career on Wall Street.
A family friend, Jimmy Maguire, who now runs the specialist operations for Henderson Brothers on the New York Stock Exchange, introduced him to some contacts. Finnerty landed a job on the over-the-counter agency desk at PaineWebber in New York.
"A couple of weeks after I joined, the Dow Jones hit 1,000 for the first time ever," Finnerty recalled. "Two years later it was down to 500, and I had to seek employment elsewhere." Finnerty moved to Drexell Burnham Lambert, hanging out with characters such as Mike The Duke' Lynch and Robert Antolini, who was his boss there.
Finnerty is proud he was on the ground in 1972 for the early days of Nasdaq, which took OTC issues traded on the pink sheets, raised their listing standards and began trading them on the nascent computerized dealer market.
"Many of the stocks we were trading back then were still traded on the pink sheets," Finnerty said. "That meant you had to call up three market makers to get your best quote. The amount of paper work involved was staggering."
Early Mission
Finnerty rejoined some of his co-workers at C.E. Unterberg in January 1992, straight out of a sales-trading position at Lehman Brothers in New York. His early mission was to kick-start a new capital-markets group, including a Nasdaq market-making desk, and he hired four professionals to get the job done.
C. E. Unterberg, which was founded in 1934, merged on April 1977 with L. F. Rothchild, assuming the name L. F. Rothchild Unterberg Tobin. The predecessor firm of the present C.E. Unterberg lasted until 1988, when it was shuttered soon after the October 1987 market crash. At the time, Finnerty left the firm to join Lehman Brothers. In 1990, C.E. Unterberg was restarted, initially specializing in mergers and acquisitions.
Today, C.E. Unterberg, which has just under 100 employees, may be one of a disappearing breed of small, privately-held investment banks that generates awe and respect on Wall Street. The current head of capital markets is Andrew Arno. Though it has a certain aura of white-shoe invincibility, Finnerty, who was raised in the tony enclave of Short Hills, N.J., is no snob.
The son of a business professor and athletic coach at Pace University, Finnerty is equally at ease hob nobbing with the creme de la creme on Wall Street as he is with a couple of barroom geezers knocking back a few cold brews at a Blarney Stone. (The field at Pace University's Pleasantville, N.Y. campus, where his dad once coached, is named Finnerty's Field. His dad is now 82).
Peter DaPuzzo, who heads up institutional equity trading at Cantor Fitzgerald & Co. in New York, recalled how Finnerty's gift of the gab and ability to charm his accounts was evident back in the late 1980s when Finnerty reported to DaPuzzo on the trading desk at Lehman Brothers.
"He was a very effervescent and popular trader who knew his accounts very well," DaPuzzo said. "He became my spokesman immediately, because I knew he was somebody who could handle the press and give intelligent quotes."
A Good Laugh
By all accounts, Finnerty was always available for a laugh. Lee Bulleri, himself a beloved folk hero on Nasdaq trading desks, tells the following yarn. Back in the late 1970s, when Finnerty was a young sales trader at Drexell, he was sent to Chicago to meet with some big accounts. On his way to meet the accounts for lunch at one of Chicago's most fashionable hotels, Finnerty stopped off to shoot the breeze with Bulleri, then at Drexell's Chicago office.
Several hours later, Bulleri took a telephone call from Finnerty. The man was pacing the corridor of the posh hotel in a state of advanced mental distress.
"Hi Lee, it's Brian," said the agitated sales trader. Finnerty explained how he had absentmindedly let his American Express card expire and now owed the hotel management for a $400 lunch. "What should I do Lee?" he asked.
"Buy a book on yoga," suggested Bulleri, jokingly. Bulleri, however, came to the rescue, meeting Finnerty outside the hotel to lend him the $400 Bulleri had kindly withdrawn from his own bank account. "He was so embarrassed that we never let Finnerty forget about the episode," recalled Bulleri recently.
Small Is Beautiful
Today, Finnerty is at the top in his game. Although C. E. Unterberg is a small firm, Finnerty points out that it is proof that small firms do thrive in an era of impersonal mega mergers. Small firms prosper with the right mixture of management and talented professionals. The firm said total revenue grew roughly 25 percent annually since the early 1990s, reaching an estimated $40 million for 1998.
According to Boston-based AutEx, C.E. Unterberg, as measured by trade volume is the ax, or ranked number one among market makers, on at least eight stocks, and is ranked among the top ten in dozens of others. As of press time, the firm takes the number one slot on AES Corporation, Castelles, ECCS Inc., EIS International, Landmark Systems Corp., Microlytics and Prime Bancorp.
The reason for C. E. Unterberg's commanding performance in these issues is no great mystery. For starters, many of the top-ranked market makers have all but abandoned thinly-traded issues. Even if they do, the larger, more-heavily capitalized firms tend naturally to support and underwrite more blue-chip issues.
Like other full-service outfits, C.E. Unterberg underwrites and researches the roster of the issues it trades. As a result, Finnerty says, investors and institutions know the value of a good call from a C.E. Unterberg sales trader when he contacts an account. "The institutions know the information we are giving them is good," Finnerty said.
"If it is required, we can commit quite a bit of capital on the names in which we are the ax," he added. "Suppose the institutions want us to sell a couple of hundred-thousand shares of a small-cap stock, we will know where the pockets of interest are. "
To be sure, the stocks C.E. Unterberg trades are mostly small-cap issues and represent only a small fraction of the dollar business transacted at much larger market makers. But as the example of Intel demonstrates, some of these small issues could themselves grew into giants one day. The original C.E. Unterberg brought Intel public in 1971, opening it for trading at $22 1/2.
Today, Intel is trading at around $122. Based on the current price, Intel would have opened in 1971 at around $1, adjusted for many stock splits. "We didn't even have a co-underwriter for the stock in 1971," Finnerty noted gleefully.
Another company which went through the roof was Uniphase Corp., brought public by C.E. Unterberg in the fall of 1993 at $8 a share. The company had a market capitalization of $30 million. "After the stock went public, it was going nowhere, you couldn't even give it away," recalled Finnerty. "We were doing most of the volume." Today, having split several times, the stock now trades at around $67 1/8 a share and has a market capitalization of about $2.6 billion.
On the relationship side, Poricom Semiconductors, a San Jose-based company brought public by C.E. Unterberg, is a particularly instructive example of how the firm interacts with its issuers. Until recently, the company had been performing poorly, trading at around $4 3/16. C.E. Unterberg had a lukewarm outlook on Poricom and other semiconductor outfits. The chief executive of Poricom, however, was furious, noting that a certain major Nasdaq wholesaler was doing the bulk of trading in his stock.
"We had a kind of a love-hate relationship with the company," Finnerty explained. "We assured the chief executive that when we issue a buy recommendation we will do a helluva lot more volume." Sure enough, C. E. Unterberg did eventually issue a buy recommendation and the stock has since been trading as high as $11 13/16.
The Dark Side
There is a dark side to this otherwise positive picture. Finnerty expresses concern at the ability of firms to make markets and turn a profit given today's narrowing spreads, even in some small-cap issues. His fear is an upsurge in volatility on small-cap issues.
"Market makers are not going to take any position in a stock that they don't want to be long or short in," he explained. "If someone tries to sell you 25,000 shares of stock that you don't want to position, it is going to go straight down. In the old days you took a position and it stabilized the stock. There is less of an incentive to do that today."
Finnerty does not discount the prospect of commissions being charged on small-cap trades, though others in the business think these commissions will mostly hit large-cap issues. More proprietary trading to offset declining profitability on the conventional side of market making was another distinct possibility, he says.
Stress
Of course trading is stressful, and Finnerty has had his share of stressful days. But veterans on Nasdaq like himself have cures for sensory overload. Once, Finnerty's colleagues, led by Antolini (recently retired from the trading desk at Donaldson, Lufkin & Jenrette) tore the shirt off Finnerty's back. Cutting a trader's tie when he had his head turned was a more common prank in the old days.
Nowadays, Finnerty's method for relieving stress is a lot more conventional. He usually unwinds on the golf courses and with his family. He and Tedde, his wife of 27 years, have two daughters, Scotti, a sophomore at the College of Charlestown in South Carolina, and Kate, a senior in high school in Mountain Lakes, N.J.
Finnerty considers Nasdaq traders a part of his extended family. In fact, he has this advice for the new generation coming up the ranks: have a mentor to teach you critical things about trading. "I had the "Duke" Lynch to show me the ropes," he said.
Finnerty's last words though are once again breathtakingly simple. "Work as a team player," he said, harkening back to his professional baseball days, "and pay attention on the desk at all times. Have fun and don't take yourself too seriously."
