When opportunity knocks, Stan Grayson, president and chief executive officer of M.R. Beal & Co., answers.
With one major Wall Street firm closing down and another refocusing its operations elsewhere in the municipal market, Grayson began scoping out available talent that would help broaden the coverage and capabilities of the muni bond desk at the New York City-based investment bank - part of an ongoing growth strategy that had been in place for the last 18 months.
It wasn't long before he hired John W. Jacobson,42,and Mark J. Grimmig, 47, as the latest pair of industry veterans to aid in that endeavor earlier this month. Both joined as vice presidents of institutional sales and trading and report to Jay Alpert, executive vice president of municipal sales and trading. The municipal desk currently has 11 sales and trading employees.
Jacobson arrived after serving a seven-year stint as a senior managing director at Bear, Stearns & Co. He was responsible for marketing, trading, and selling intermediate and long-term bonds, and was also involved in the planning and development of Bear's trading systems.
Before that, Jacobson worked as a first vice president and fixed-income trader at the former Prudential Securities Inc. for one year from 1999 to 2000, and as a director and trader at CIBC Oppenheimer Corp. from 1992 to 1999.
Grimmig, meanwhile, joined the firm from JPMorgan, where he worked for six years as a managing director. JPMorgan acquired Bear Stearns in a $236.2 million deal earlier this year when the nation's fifth largest investment bank collapsed due to risky bets on securities tied to subprime mortgages amid a historic credit crisis.
He was responsible for building and maintaining a book of municipal institutional accounts and introducing new financial products, such as tender-option bond programs and credit-default swaps.
Prior to JPMorgan, Grimmig also worked at Bear Stearns and was responsible for municipal bond accounts from 1990 to 2002, training junior salespeople, and cross market and development products other than munis, such as TOBs and taxable municipals. He began his career in 1981 as a retail municipal bond trader at Samuel A. Ramirez& Co.
Jacobson received a bachelor's degree in business administration from Skidmore College, while Grimmig attended the State University of New York at Brockport.
Both Jacobson and Grimmig are responsible for covering their own book of institutional accounts - a broad range of large top-tier investors, medium-sized second buyers, and smaller third-tier accounts - many of which they brought with them to the firm, according to Grayson.
The pair will provide added strength to sales and trading efforts through their extensive experience and long-standing client relationships, according to Bernard Beal, founder and chief executive officer.
"That background enhances the premium execution we can and hope to provide," Grayson agreed. "With the addition of guys like this, our ability to provide effective coverage and growth increases."
He said the recent dislocation among large municipal firms, including Bear and UBS Securities LLC, have provided a keen opportunity for the firm. UBS shuttered its municipal institutional business after the firm announced an effort to refocus its fixed-income, currencies, and commodities group and zero in on other core business areas, on the heels of more than $30 billion in write-downs related to U.S. residential mortgages.
"Current market conditions afford boutique firms, such as M.R. Beal, unique opportunities to increase our bench and differentiate ourselves from the bulge-bracket banking institutions," Grayson said.
"It's opportunistic in terms of quality people that have become available in the market because of the dislocation," he explained. "I think where individuals in the past may not have looked at small regional firms as a career opportunity, they are starting to look closer at those opportunities."
At the same time, the firm continues to seek out additional opportunities to add value to its municipal team.
"We will be aggressively taking advantage of more hiring and business opportunities in the future," Grayson said. "We continue to look for people who are a good fit for us."
Overall, Beal currently covers about 150 institutional accounts across the country, including mutual funds, property and casualty companies, trust departments, and smaller institutional buyers of tax-exempt paper, Grayson said.
The existing expansion effort targets its fixed-income and equity business, but he said the firm has a particular commitment to bolstering its municipal platform.
"Munis have been and continue to be a core piece of our business that's our sweet spot for the last 20 years," Grayson said.
The firm, which also has offices in Chicago, Sacramento, and Dallas, senior managed $543 million of municipal underwritings in 2007, according to Thomson Reuters data. Since 1991, it has senior managed new issue offerings totaling $8.2 billion.