Magazine article Insight on the News

Wall St. West Paved in Gold

Magazine article Insight on the News

Wall St. West Paved in Gold

Article excerpt

Remember the Roaring Eighties on Wall Street? Braggadocio bond traders and merger-and-acquisition specialists threw around $100 bills like Monopoly money, smoked illicit Cuban cigars and otherwise flaunted their power and wealth. It all was chronicled in best-selling books such as Liar's Poker by Michael Lewis and The Bonfire of the Vanities by Tom Wolfe.

Today, a new breed of power player has emerged in the financial community. Lowly, pocket-protector-wearing technical analysts suddenly have emerged as the masters of the financial universe.

Trained in science and engineering as well as business, and based in San Francisco rather than Lower Manhattan, these stock analysts and their colleagues have flourished during the last two years as initial public offerings, or IPOs, blossomed on the market. The surge has been led by technology companies from Netscape Communications Corp. to Pixar Animation Studios. And the San Francisco investment bankers have gone along for the ride.

"It's revenge of the nerds," says John Hummer, a partner in the Hummer Winblad investment-banking firm, which specializes in software-company placements. "The meek have inherited the earth."

For several years, high-tech companies in Silicon Valley and along the rest of the West Coast have felt more at home with their California compatriots in the investment-banking business. And in 1995, for the first time ever, a San Francisco-based investment house, Robertson Stephens, led the United States in IPOs, according to information just released by the Securities Date Corp.

Robertson Stephens last year underwrote 34 IPOs worth nearly $1.5 billion -- an average of $42.8 million per deal. In second place was stalwart Goldman Sachs with 32 book-man-aged IPOs. Alex Brown & Sons, the Baltimore-based investment house with a heavy Bay-area presence, came in third with 28 IPOs. Hambrecht & Quist, also of San Francisco, finished just behind them with 25 deals.

West Coast investment-banking houses are emerging as a real threat to the hegemony of Wall Street. And, as residents of the Pacific Rim, they also have their eye on similar deals in Thailand, Singapore, Malaysia and China.

"More and more, the start-up companies, the ones going public, realize who really understands them and can interpret them to the marketplace better than the New York competition," says Sandy Robertson, founder of Robertson Stephens.

In addition to enjoying an intimate understanding of the business or, in the local slang, "sufficient intellectual bandwidth," these firms also have deep roots in the community. Robertson Stephens has been in San Francisco since 1969 -- preceding the development of the personal computer by nearly eight years. Many semiconductor companies, including Intel Corp., were founded at the same time.

"I started out as the West Coast partner of Smith Barney, but I could not get them interested in technology," Robertson tells Insight. "So I thought I would have to do it myself. I wanted to provide major-bracket, New York-type investment-banking advice for these companies without being from New York and with people being right here next to them."

Says Tony Perkins, editor in chief of The Red Herring, a San Francisco-based magazine that covers the hightech investment community: "Sandy Robertson and the others show the value of finding a niche and sticking with it. They deserve all the success."

Recent hype about Internet and World Wide Web-related stocks, such as Netscape and Pixar, has boosted the fortunes of these investment-banking houses in the Bay area and compelled Wall Street players to open shop there as well. …

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