James Gammon, a legendary trader and portfolio manager in the municipal bond market, died March 12 in Fairfield, Conn., from “complications associated with his heart,” according to his family. He was 69.
Gammon was called “The Wizard of Bonds” in a tribute by Smith’s Research & Gradings, a credit analysis and research firm.
“He is one of the most important figures in municipal finance during the past 50 years,” the Fairfield-based firm wrote. “His record speaks for itself: Mr. Gammon was simply one of the best buyers in the business — ever.”
Mr. Gammon retired in 2001 but before that he was president of Lebenthal Asset Management Inc. and portfolio manager of the firm’s three muni bond funds and private accounts for about seven years.
“I used to describe him as the largest buyer of municipal bonds on earth,” James Lebenthal, co-founder and creative director of Alexandra and James as well as former chairman of Lebenthal & Co., said Monday. “He had outstanding performance if you were willing to risk paper cuts from all of those confirmations.”
Mr. Gammon bought and sold more municipal bonds in a day than many competitors traded in a month, according to Smith’s tribute. His aggressive trading style forever changed the muni bond-buying community.
Before helping to form Lebenthal Asset Management, Mr. Gammon was a senior vice president and senior portfolio manager at Loews/CNA Holdings Inc., a unit of Loews Corp., an insurance company that held several billion dollars worth of munis in its investment portfolio. He was at Loews for nine years, but left in 1993 after the Tax Reform Act of 1986 eliminated many of the tax-exemptions for insurance companies and banks.
During his time at Loews, Mr. Gammon left a strong impression on many traders, who coined the expression “getting Gammonized,” or locked out of purchasing bonds because he had bought them all. He frequently would purchase entire bond issues, the traders said.
Mr. Gammon consistently posted No. 1 returns for one-year, three-year and five-year investments, according to Lipper Analytics.
He was the first major buyer of tax-exempt zero-coupon bonds and pioneered the use of techniques such as escrowing bonds to maturity and stripping or converting high-coupon bonds into non-callable zeros, according to Smith’s. He also helped build the taxable bond market. He helped promote muni analysis, often hosting investor meetings to disseminate an analyst’s findings.
Before Loews, Mr. Gammon worked at General Electric Investment Corp. for 20 years. While at GE, he helped form the Financial Guaranty Insurance Co. and was chairman of the credit committee of FGIC’s founding board of directors.
Mr. Gammon was born in Iowa. He was survived by his wife of 45 years, Frances, and his son Matthew, as well as his mother Hazel and sister Ruth. His family held a private service and asked that donations be sent to Jennie Edmundson Hospital-Memorial for James L. Gammon, 933 Pierce St., Council Bluffs, Iowa, 51503, where Mr. Gammon spent a lot of time as a child with asthma.
