Growing Rich - Arabictrader.com

GROWING RICH WITH GROWTH STOCKS
flattered that someone was willing to pay him so much cash to pick
stocks. Each partner was also offered a five-year employment contract
with the bank.
“Fiduciary Trust couldn’t buy New York Venture (the mutual fund
company) because of the Glass-Steagall regulation,” he says. “So they
let us keep it. It was very small at the time. They said as long as we
cleared our orders through their trading desk, allowing them to
monitor everything to make sure there were no conflicts of interest,
they didn’t mind us keeping the fund.” Davis and his partners made
several million dollars on the deal, which turned out to be a huge
bargain for Fiduciary Trust. The bank eliminated the name Davis,
Palmer and Biggs and integrated the investment firm into its existing
operations. Guy Palmer left a short time later, despite his five-year
contract, to become head of the General Motors pension plan. Davis
and Biggs stayed on. New York Venture was subsequently renamed
Davis New York Venture.
“At the end of the five-year contract period, I told Jeremy I wanted
to focus my efforts on the mutual fund,” Davis says. “I had bought
out Guy Palmer’s interest when he quit and had 30 percent ownership
of the management company. Jeremy sold me part of his interest too.
The bank was helpful and let me stay on as a consultant. Jeremy went
on to become vice-chairman and chief investment officer of Fiduciary
Trust, just as his father was at the Bank of New York. His brother,
Barton Biggs, is now the chief investment strategist at Morgan Stanley,
so he came from an investment family too. Jeremy and I have been
working together and sitting in the same partners’ office since 1969.”
Davis had been the firm’s research heavyweight. He did all of the
in-depth analysis on almost every company. Biggs was also focused
on research, but had a more broad interest in economics. In addition,
he set the investment strategy. “He offered wisdom and judgment,”
says Davis. “Thankfully, he shot down some of my worst ideas.” Biggs
had gone to Yale University and had done post-graduate work at the
London School of Economics. He was the overall portfolio strategist.
Davis was the stock picker. Palmer’s main focus, before he left, was
generating new business and making client contacts. After Davis’s
contract was up, the bank had no problem letting him stay on as a
consultant, since it could benefit from his research.
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