Chapter 2
Tony wasn't at
all pleased with the market comparables Donna laid before him on the executive
dining room table two days later. He pushed the papers aside and asked
irritably: "What am I supposed to do with this crap?"
"You could at least keep your voice down.
There are other people using the hallway."
"Yeah, I know, you don't have to tell me where
the johns are. Your pals from M&A are probably checking in there every
half hour to see if they've been fired. If we didn't know better, it'd
look like the investment bankers had an epidemic of diarrhea. And speaking
of your pals, whatever genius put together these figures for you deserves
to get fired."
"I did the work myself. And now that you've
heard that, you can be a little more polite. I'm not your employee."
Tony rewarded her mild protest by getting
even angrier. "Donna, I don't need to be reminded that we've got something
going. You're a great girl, but stop taking my temperature, because I don't
like the place you're aiming the thermometer. O.K.? Now can we get back
to work?"
"Bastard," Donna said, more to herself than
to him. "What's the matter with the figures?"
Tony accepted her capitulation with good grace.
"I've told my customers that Grantley is a sure thing to hit 30 if we toss
out the results of its non-pharmaceutical businesses. Your comparisons
with other drug stocks wouldn't put Grantley above 25."
Donna defended her work with a cliche: "Figures
don't lie, Tony."
"Of course not, and I wouldn't want them to;
I just want them to use a little more imagination. You've picked six comparable
companies, O.K.? First, we get rid of the two with the lowest market ranges.
Then we price Grantley on the basis of projected drug earnings. The last
two years have been lousy with Buchanan and his management off on Polish
junkets half the time. Have I solved your problem?"
"Yes, I understand. The price for Grantley
is supposed to come out at 30."
"Hey, that's good thinking," Tony complimented
her, "I couldn't put it better myself. But I'm really a little ashamed
of myself. We've been sitting here talking about nothing but my little
sales project. You know how interested I am in your work. Do you have any
new deals shaping up in your department?"
As Donna ticked off some merger possibilities
that were in early stages of discussion, Tony listened to her with genuine,
undiluted interest. More and more, he was coming to believe that, though
stocks could rise and fall, he really knew how to pick women.
The next day Tony mailed out Donna's revised
comparables to every customer who had not rejected his Grantley option
recommendation out of hand. He gave them a few days for reflection, because
he was no high-powered salesman, that was not his style. There was plenty
to do while he waited; he circumnavigated his telephone card index a few
times to make sure he missed nobody - not even the Florida vacationers
and the cowards who hid behind their answering machines. And of course
the cold calls promised endless opportunities to good salesmen like Tony
whose egos were not dented when the prospect hung up in mid-sentence.
Tony's campaign was helped by the new high-tech
phones that had just been installed in the sales department. Fenster had
ordered them before the recent business downturn and had put up too large
a downpayment to cancel the purchase. The phones could do everything but
your socks. What Tony liked best was the confidential voice messaging capability.
Callers could leave their messages on the phone, as on a customary answering
device, but access to the recordings could only be obtained by hitting
a personalized four-digit password. In a rare exercise in sentiment, Tony
had programmed 0909, a number standing for September 9, the birthday of
his dimly remembered father, who had died when Tony was only seven.
After a few weeks, Tony had to admit that
the Grantley sales push was a flop. He'd sold options to only a dozen customers
and a total of about 2,000 Grantley shares to a few imbeciles who couldn't
understand what a call option was, even though he used words of one syllable
and showered them with Fenster's option strategy brochures. Tony was persuaded
that, on the ladder of evolution, there was a rung reserved somewhere between
homo sapiens and the chimpanzee for the securities customer. At least Ron
Abrams hadn't disappointed him entirely but the order he placed was much
more modest than Tony had hoped.
Right after the Grantley annual meeting, Tony
had bet some of his own money on the death play, buying some call options
in the personal brokerage account he maintained at Fenster. Donna matched
his investment in her account, but the firm had imposed strict elements
on the positions their employees could take in any stocks that were being
recommended to customers. So Tony and Donna were never going to get rich
on their options.
It seemed a shame. Tony's Grantley analysis
was rock-solid but he just couldn't get the financial support he needed
to turn a decent profit. Donna, however, had a new idea.
It came to her when they were in bed one Sunday
morning in her Chelsea apartment. "Your problem is you haven't gone where
the money is."
"For Chrissake, Donna," he growled, "you're
getting worse than me. What a time to think of business." He rolled away
from her and punched his pillow.
Donna laughed and pulled him back. "Don't
knock it if you haven't tried it. Talking dollars in bed is better than
talking dirty; it's much more exciting and will make you last longer."
Tony sat up, his feet dangling from his side
of the bed. "I forgot that you're an expert." Involuntarily he thought
of Bill Gagliano's sneering innuendo, but, unable to restrain his curiosity,
he asked "O.K. I'll bite. What's the place where the money is?"
"The trading department, of course. Why don't
you talk to Hank Jacobs about taking a major position in Grantley for the
firm?" Hank Jacobs was the head trader, and a member of Fenster's capital
committee, which had authority to approve all large investments by the
firm.
"You've got a great little idea there, Donna.
If I'm lucky enough to have Hank say yes, Fenster becomes rich. What's
in it for me?"
"A big fat check at Christmas bonus time,
if you don't broadcast your idea all over the office. I know for a fact
that your good neighbor Gagliano got a hefty bonus last year for bringing
the Hollis deal to investment banking. These payoffs aren't in the firm
manual, but that's how our bosses work if you know how to keep your mouth
shut."
"Okay, I'll see whether Hank goes for it,
but if we're really talking oversized money bags, how about your Uncle
Damon?"
Damon Marzo, Donna's childless uncle, doted
on her. She reciprocated his passion with the fervent hope of becoming
the sole heir of his reputedly vast though mysterious fortune. One of the
ways she showed her worthiness to inherit was to cook him regular Sunday
breakfasts of bacon and eggs, served up in such enormous quantities that
his early demise from excessive cholesterol would not have been a medical
surprise.
So far as Tony Trask knew, Uncle Damon was
his greatest rival for Donna's attention. Many a Sunday morning, Donna
kicked him out of bed to give him time to clear out before her uncle arrived.
Damon, his morals as chilly as his snow-white hair, did not look with approval
on his favorite niece's unwedded bliss and treated her lover with minimal
politeness whenever their paths crossed. From Tony's point of view, it
wasn't all bad that the old man kept his distance, because he was not anxious
for Damon to treat him as a member of the family. Too much togetherness
might give Donna the wrong ideas. On the other hand, Damon had a lot of
dollars, some of them perhaps underemployed, and Tony had once read an
article in the Times implicating him in a big municipal contracting
scandal. Maybe the guy had possibilities as a backer.
If Uncle Damon would wager some of his riches
on Grantley stock, Tony was ready to be as warm as the mid-day sun. Donna
didn't give him much encouragement, however: "I think Uncle Damon's gonna
sit this one out. I've talked to him about Grantley, and he's very impressed
with your thinking, I know he is. But I think it's kind of a test case
for him. If you pull it off and your predictions prove out, I wouldn't
be surprised to see Uncle Damon throwing a lot of cash at your
next deal. That's why it's important to get the trading department
behind you before it's too late. It won't do you any good to tell Uncle
Damon that Grantley Buchanan died on schedule and the stock went through
the roof. He's going to ask how much money you made for your investors.
"Now can I ask you to get out of my bed? I
feel some scrambled eggs coming on."
On Monday, after the market closed, Tony went
to see Hank Jacobs. Hank made a big deal of his democratic attitudes which
he projected by sitting at a desk in the middle of the trading floor that
couldn't be distinguished in any way from the work spaces of the other
traders.
Tony had decided it would be best to take
Hank by surprise. It wasn't hard to do, because Hank wasn't the kind of
guy you made appointments with. If you tried, he would have laughed at
the formality.
Tony also knew that Hank didn't like to beat
around the bush and could not pretend to give a damn how the Jets had done
in yesterday's home game. Therefore, Tony plunged right in, and he was
gratified to see Hank's eyes fixed on him in evident interest. Maybe Donna's
suggestion wasn't so bad. The year was drawing to a close, and Tony had
heard rumors that the market-making operations that Hank Jacobs supervised
had really taken a nose dive. Maybe the head trader wouldn't mind an opportunity
for a quick year-end profit to make him look a little better when management
met to make its annual business review.
Hank asked Tony a few questions but was noncommittal.
"Thanks for coming to see me," he said. "I like your style."
But what did he think about the idea? Tony
knew him well enough not to press for an answer.
* *
*
In early November, the director of public relations
of Grantley Enterprises received a phone call from the New York Stock Exchange:
"Hello, this is Jill Manthey at the Exchange. I'm sure you've noticed that
over the last several days there's been a sharp increase in Grantley Enterprises'
trading volume."
"Yes, we have."
"Well, daily trades have reached levels where
we have to make our usual inquiry." She paused as if she were reading him
a printed statement. "Is management aware of any unannounced developments
that could account for the rise in trading volume?"
The PR director answered quickly: "There's
absolutely nothing that we're aware of. Maybe people are just beginning
to realize what a great bargain Grantley stock is."
Ms. Manthey seemed satisfied. "That's fine.
Could you please send us a confirming fax?"
"Of course, I'll get it off to you right away."
* *
*
From a technical
point of view, Tony Trask's market strategy couldn't have done better.
The news for which he had been waiting came across the Dow Jones tape on
December 2:
ATLANTA - DJ - Grantley Buchanan, founder and CEO of Grantley
Enterprises, Inc. died this morning at age 90. Company spokesmen attributed
his death to congestive heart failure. The Board will meet this Thursday
to appoint a successor and vote to consider strategic moves.
The moves, when announced Friday morning, were
right on target. The new CEO, with Board backing, declared a return to
basics, with a focus on pharmaceuticals and an orderly divestiture of other
operations. A boost in the dividend was also forecast.
Grantley stock shot through the roof, and
what was better, exceeded Tony Trask's projection, reaching $35 by mid-December.
He took quick profits for his customers. Donna and he also closed out the
Grantley options in their own accounts. He was not going to ride with the
long-term performance of the new Grantley management. That wasn't how you
worked a death play.
For a while longer Hank Jacobs kept Tony guessing
whether Fenster had benefited from the quick Grantley run-up. The suspense
was dissipated one afternoon when Hank turned up in the bullpen, flashing
one of the broadest grins Tony had ever seen on his shrewd, creased face,
and offered him a cigar.
"New father?" Tony asked.
"It would come as quite a blow to my girl
friend. You know why I'm here. It's to congratulate you and Fenster on
the Grantley deal. You've really made our December."
Liar, Tony thought, I made your year.
"What's that all about?" Bill Gagliano asked,
coming around the partition as soon as Jacobs had moved off.
"It's none of your damn business," Tony snapped,
exasperated by Gagliano's typical nosiness.
As a matter of fact, Tony was wrong. Grantley
Enterprises was very much Gagliano's business. He had been an attentive
listener to Tony's sales calls and finally put a lot of his own dollars
into the gamble, both in his securities account at Fenster and in a few
others he maintained at other brokerage firms, in violation of the firm's
house rules.
At lunch in the staff cafeteria Tony told
Donna about the presentation of the cigar. "Don't let Jacobs get you down,"
she advised. "He's got the trader personality to the nth degree; he lives
and breathes secrecy. Anyway, he's not the guy who hands out the bonuses.
When Christmas rolls around, you'll hear from Barney Fenster."
Donna was right. In late December Tony was
summoned to the office of the CEO for the first time since he'd been at
the firm. Barney Fenster emerged from behind his enormous kidney-shaped
desk and shot his hand out of a Giorgio Armani cuff to give Tony an affable
greeting. Some of the staff made the mistake of writing off the 50-year-old
president as a dilettante. His amused, good-natured face and trim figure
were constantly featured in the party pages of Women's Wear Daily,
and his celebrated townhouse evenings numbered among the guests more PYTs
(pretty young things) and Civil War historians than investment bankers
and businessmen. Tony Trask suspected that Barney's pleasure-seeking social
style was misleading. For years he had been engaged in a devastating power
struggle with his cousin Robert. After the two young Fensters were simultaneously
appointed executive vice presidents, rumor had it that one evening Barney
was found on his knees feeding out a measuring tape to satisfy himself
that his cousin's new office was not even an inch wider than his own. The
dimensions came out even, but Robert did not survive long.
Barney Fenster was not a hands-on manager
but he wanted to make sure that everybody would remember their boss's name.
When his people won promotions or advanced financially, he wanted them
to owe their gratitude to him and not to some committee whose membership
he had the power to shift at a moment's notice. It was for this reason
that from the first year of his accession he had insisted on presenting
personally every bonus check to be awarded to Fenster professionals.
After motioning Tony to be seated, Fenster
got right to the point. "Tony, how long have you been with the firm now?"
"It will be four years in March."
"That's wonderful, you've become a real member
of the Fenster family, and I hope you feel that way. When I got my start
in this business, four years probably wouldn't have seemed like such a
long time. But in those days brokers knew what loyalty meant. Now people
sell themselves to the highest bidder and loyalty be damned.
"Nevertheless, we're too smart at Fenster
to take any chances about losing our talented folks. That's why I have
a little surprise for you today." He handed a sealed envelope to Tony.
For a fleeting moment Tony wondered whether
protocol required him to thank Fenster for the check sight unseen and to
beat a quick retreat. But he wasn't going to get anywhere with these sharks
by worrying about protocol. He unsealed the envelope and took out the check.
Barney Fenster was right. It was a very little
surprise. The check was for $2,500.
He thanked Fenster with as little warmth as
he could get away with and rose to leave. Barney added a few words of encouragement:
"Keep up the good work, Tony, and you'll be one of our first new officers
of the 90's. Another Grantley Enterprises would be just the ticket."
Tony was fuming as he returned to his desk.
Barney Fenster's simpering platitudes had made his skin crawl. If Tony
was a "real member of the Fenster family," then it looked like Barney had
made up his mind to treat him as a poor relative. And meantime Hank Jacobs,
who was close to a cretin as far as Tony could see, was making a fortune
as one of Barney's ass-kissing cousins. That was one way to get ahead,
but it was not Tony's. These guys were like the chintzy Ithaca realtors
he'd worked for during college, only in spades.
"Can you believe the cheap bastard?" Tony
whispered into his phone to Donna, his wariness of Gagliano's big ears
prevailing over his anger.
Donna dismissed his news. "Forget it, Tony,
I've got something more important to tell you. You've made a big hit with
Uncle Damon. He wants to see you for lunch tomorrow."
Donna had given Tony the address of a northern
Italian restaurant newly opened off Second Avenue. The maitre d' ushered
him into a private room, where Damon Marzo was waiting for him. Donna's
uncle hardly acknowledged Tony's arrival and suggested: "Let's order. I
don't like to talk business while I'm eating."
The menu was the Italian version of nouvelle
cuisine, but with a vengeance. Tony selected a specialty ravioli, and found
that it was made only of spinach. While he chewed unenthusiastically, he
observed his host, who ate in silence. Marzo's face was as white as his
curly hair; it seemed that the sun had never shone upon him and that no
blood coursed beneath his skin. He never smiled.
When they had finished their main courses
Damon did not ask Tony whether he wanted a dessert but ordered two espressos.
He drained his cup in a swallow and addressed Tony for only the second
time: "You're pretty good, you know. You really pulled off that Grantley
business."
"Thank you, Mr. Marzo, the stock performed
very well, I think, but unfortunately I did a lot better on the deal for
other people than I did for myself."
Damon Marzo gave him a stern look. "But that's
the way it should be, young man. Make money for others, and in time they'll
make money for you. That's always been my golden
rule." Before Tony had time to ponder his wisdom, he added: "How'd
you like to handle five million bucks? Are you up to it?"
Tony produced his most confident smile before
he replied: "I'm accustomed to dealing with very large accounts. Technically,
Fenster discourages fully discretionary arrangements, but many of my big
clients give me pretty broad latitude."
Damon nodded. "Five million bucks for investment,
no questions asked. It's the results my associates and I are interested
in, and results like Grantley Enterprises will be completely satisfactory.
What a wonderful idea you had there, young man. Tremendous stock values
waiting to be realized and only one life standing in the way, the life
of a stubborn CEO."
Silence fell again between the two men, but
it was not like the silence in which they had eaten their meal. Then Marzo
had simply felt no need for conversation or perhaps he had found over the
years that words could interfere with good digestion. The new silence was
more calculated, a probe of the depths of Tony's ambition, a tacit offer
of partnership without rules.
Tony returned Marzo's unblinking gaze and
tested the meaning of his words. "Grantley was, of course, what the investment
business calls a 'special situation.' Buchanan had a chronic illness, but
the trick was to time the progression of its final phase."
Damon seemed intent on drawing Tony out. "Tony,
almost every stock I've ever bought was supposed to be a special situation,
but there was always another stock they told me I couldn't afford to pass
up. How special was Grantley Enterprises?"
"Maybe not all that special if I use my brains,
Mr. Marzo. There are a lot of CEOs out there whose greatest gift to their
shareholders would be to disappear. Not all of them, of course, have terminal
illnesses like Grantley Buchanan, but a lot of them take risks, sometimes
almost incredible risks. I see it as my business to identify those risks,
and, if I may use some more investment jargon, 'capitalize' on them."
Marzo took the hint without breaking the expressionless
lines of his face. "People die in many ways, Tony; it's a question of fate
or sometimes merely of ingenuity. To me and my investors, though, these
matters are details with which we don't get involved. If we invest five
million bucks, we're looking for answers, not questions."
Tony readily agreed. "That's what you're entitled
to expect if you've picked the right man. What's your usual compensation
rate?"
"I couldn't tell you, because we have no interest
in the usual. If I'm not very much mistaken, you could be something out
of the ordinary. I think we'd be prepared to give you a 25% interest in
net profits, but I'd have to run the deal by a few of my key partners.
Do you want to think it over?"
Tony deferred his answer. "Who are your partners,
Mr. Marzo?"
Damon was not at all offended by the directness
of the inquiry: "I always expect that my business will be handled very
quietly. We live in a very noisy country, Tony, and that makes me look
abroad for partners and bank accommodations. Geneva's pretty good, but
I don't like what they've been doing lately to weaken their secrecy laws.
Anyway, Switzerland's not the only place in the world. We have many players
and we spread our accounts around; it's better that way when nosy people
come prying into our business. And they do keep looking, there's no way
to prevent it. But there's one thing we can promise them, Tony: if they're
interested in our investments, they better have a big travel budget and
be ready to fly anywhere - even Liechstenstein or the Caymans. We try to
keep one step ahead of them; there's always a smaller country with a shorter
runway."
"How do you place your stock market orders?"
Tony asked, well aware that Marzo was playing it safe with generalities.
Damon folded and refolded his napkin. "I think
we're getting a little ahead of ourselves there, Tony. You haven't said
yes and neither have my partners. You're a nice guy, but I only talk business
with people I'm doing business with. That makes sense, doesn't it?"
Tony nodded but did not stir from his chair.
He had the feeling that Damon would tell him when the lunch was over.
Marzo took out his wallet and spun a business
card across the table. It showed an address in Long Island City.
"Think my proposition over, Tony, and come
to my office Thursday, after the market closes, of course. I wouldn't want
you to lose business on my account." He rose to leave and Tony followed.
When they parted at the restaurant door, Marzo had the last word. "I'd
just as soon that Donna doesn't know our business. That makes sense too,
doesn't it?"
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