Short Interests: Seeing a big spike from Iraqi strike

If the United States goes to war with Iraq, the biggest risk to investors is being out of the stock market, says the investment guru known as Dr. Bob.

“You will make the biggest mistake of your career if you don’t have every one of your clients in the market if we go to war,” says Robert Froehlich, Chicago-based chief investment strategist for Deutsche Asset Management Americas.

Speaking at the Wayne, Pa.-based Bank Securities Association’s community and regional banking forum in Chicago last week, Mr. Froehlich said that war, at first a negative for stocks, stimulates the economy and helps the market come back.

In a war with a Iraq, he said, the rise upward could be significant should a couple of things happen.

“We take out Saddam Hussein. I’m guessing it’s worth 800 points on the Dow,” he says. “If we do that, and someone gets ahold of [Osama] bin Laden, and he goes out, what do you think, 1,000 points?”

Thinking small

One new independent broker-dealer is opening its doors to small producers – representatives who generate less than $100,000 a year in gross commissions. Called Contemporary Financial Solutions Inc., it is the sixth broker-dealer in the Pacific Life Insurance Co. network. The National Association of Securities Dealers approved its license last month.

The new firm, based in West Palm Beach, Fla., is looking for reps who usually are shunned by other independents and full-service firms, says John Poff, the president and chief operating officer of Mutual Service Corp., another West Palm Beach broker-dealer affiliated with Pacific Life of Newport Beach, Calif. Many of Mutual Service’s principals have a hand in running the new firm, he says.

The firm wants lawyers and certified public accountants who are licensed to sell securities, focusing on funds and annuities, Mr. Poff says. The new firm keeps costs down by not offering sophisticated asset allocation models or heavy marketing, he says.

Stock and bond traders aren’t a likely fit.

Contemporary Financial Solutions also is looking for independent reps who are thinking of retiring and may be having a hard time finding a partner to take over their assets.

Picking their spots

Minority ownership is the driving strategy behind ICV Capital Partners LLC.

The New York-based private-equity firm, which is 51% minority owned, focuses on businesses that are owned by minorities or provide products or services to minorities. Willie Woods, managing partner, who owns 51% of the year-old firm with managing partner Taurus Richardson, tells sister publication Pensions & Investments that ICV’s other focus is businesses that operate in or hire from inner-city markets.

Mr. Richardson notes that the inner-city market needs capital, but ICV, which has $130 million in assets, is being extremely cautious about making investments. “We expect to look at as many as 300 pitches a year, but want to do only one or two deals a year, so that we don’t lose any money for our partners,” he says.

So far, the firm has made one investment, committing $15.1 million to acquire Sterling Foods Ltd., a San Antonio-based producer of baked products for military and commercial markets.