Jimmy Fellus can speak five languages; mostly he talks bonds.
While Sterne, Agee & Leach Inc.’s head of fixed-income trading is conversant in Arabic, French, Hebrew, and Spanish, he’s earned his living the past 20 years speaking a dialect of English that grew out of Wall Street’s bond community.
At the start of this year, Fellus landed himself a corner office as a senior managing director in Sterne Agee’s midtown Manhattan office — a modern, bright, and airy space the firm this Spring took overfrom a hedge fund. Turns out folks at the Birmingham-based firm speak his language too — albeit in an easy, southern variation.
Under the direction of executive managing director Charles White, Sterne Agee’s public finance group has been retooled and is expanding in key markets. Over the past few months the firm has added sales personnel in Boston, Los Angeles, and San Francisco.
The company brought in Fellus — who got his start in the 1980s at Mabon Nugent & Co. and held leadership posts at Gruntal & Co., BHF Bank Securities, Societe Generale, and Advest Inc. — to lead a seasoned New York team, including muni traders Tony Lauriello and Kevin Cashman, and analyst Tom Monaco.
Sterne Agee bolstered its Manhattan office in 2003 with a banker, New York City Councilman David Weprin.
The firm hired Weprin, who now chairs the Council’s Finance Committee, in October 2003 to lead its push into the Northeast region. Weprin, who has a law degree from Hofstra University, worked as a muni banker at PaineWebber, Kidder Peabody & Co., and Donaldson, Lufkin & Jenrette. Public life, and New York City politics, are part of Weprin’s DNA. His father, Saul Weprin, was Speaker of the New York Assembly from 1991 to 1994, when he died. His brother, Mark Weprin, succeeded their father and still holds the seat in the Assembly.
At the time of Weprin’s arrival, the firm also hired Douglas Carter to manage its public finance banking. Carter had been a senior vice president at First Southwest Co. in Charlotte, N.C.. The game plan White and Carter intended to execute didn’t pan out as expected. Carter left Sterne Agee and in December 2005 he formed DEC Associates, an advisory firm in Charlotte.
Over the past few years, the firm has slipped steadily in the national bookrunner rankings, according to Thomson Financial. In 2003, the firm ranked 55th after managing 58 bond sales worth a combined $535 million. The next year, it slipped to 66th in the rankings as its volume of business fell to $302 million through 39 transactions. Last year, the firm ranked 75th as a bookrunner after managing 29 bond sales worth 239.9 million, according to Thomson.
So far this year, Sterne Agee & Leach has managed 16 deals worth $142.8 million.
“We were in transition,” White said of the firm’s diminishing numbers. “We had to find the right guy to run the business.”
To compliment Fellus, and to provide supply to his New York trading staff, the firm in June hired B. Hanson Slaughter as a senior managing director for public finance. To White, Slaughter is the right guy.
| Sterne Agee's leadership team: seated, left to right, James Fellus and David Weprin; standing, Charles White and Hanson Slaughter. |
Public finance is a natural fit for the 34-year-old Slaughter. His father, William M. Slaughter, is a founding partner at the Birmingham-based law firm of Haskell Slaughter Young & Rediker LLC, which ranked third among bond counsel in Alabama for the first half of the year. The younger Slaughter got into the business early, working several summers in retail operations at the former PaineWebber, where he worked as an analyst and associate after graduating from the University of Virginia.In late 1998, Slaughter took a break from public finance to run a small natural gas exploration company in Shreveport, La. He subsequently worked as a vice president with Porter, White & Co. and got his MBA through Duke University’s executive program.
“My goal, really, is to create a pipeline to get product up to our traders — so we need to have quality bankers out there originating business,” Slaughter said. “We want to replicate what we’ve done in New York,” he said, referring to the success the firm has had with its Northeast effort.
Weprin’s efforts and the firm’s business plan, by the numbers, seem to be paying off. Sterne Agee is focused, at least in New York and its expansion into other regions, on landing spots as co-manager or in the selling group.
As a co-manager of bonds sold by New York issuers, the firm currently ranks 24th, working on nine sales worth $138 million, according to Thomson. It made a gradual climb from the seven deals worth about $109 million in 2003 to the 23 deals worth about $422 million last year, according to the data. Slaughter said that when selling group work is factored in, the company has been involved in underwriting more than $7 billion worth of bond sales since 2003.
Still, the firm’s public finance leadership has a firm handle on what kind of market player it can and will be. Slaughter said while he’s comfortable with the business it has carved out for itself, he looks at participation on competitive deals, and co-managing assignments as a spring board for bigger things.
“We’re aggressive about building this out. I’m not going to sit back and be happy just being a co-manager — we want to earn our keep and work hard, but we’re going to show people that we’re not going to be just a local firm, or a regional firm, we want to be a national underwriting firm,” Slaughter said. “Believe me, I don’t think there is an RFP out there that I haven’t gone after since I got here in June.”
From Fellus’ perspective, he likes the talent he’s got on his trading team and takes pride in its ability to move product.
“I’m not going to beat the Goldmans out there, so instead of trying to fight, we try to help them,” Fellus said.
Fellus and White believe they’ve got a winning model. They say the group is making money and that the firm, which was started in 1901, remains committed to public finance.
“We’ve got a model that rewards entrepreneurial thinking, and that’s exactly what we’re looking for,” White said, adding that he and Fellus have interviewed more than 400 muni sales personnel for opportunities at Sterne Agee.
“That tells you something. There are a lot of salesmen out there looking for a home today,” Fellus said. “When you’re at a big firm, you’re really a product of what the firm produces. Here, you eat what you kill.”
