WEEK IN REVIEW

Fund stars’ bucks ‘through the roof’

Americans love stars more than any astronomer does, so it’s not astonishing that the star system is taking over mutual fund management, too. Top managers are getting bigger bucks than ever, in the multiple millions rather than the hundreds of thousands, reports Richard Lannamann, managing director at headhunter Richard Reynolds Associates Inc.

“The world has probably changed most for the star fund manager,” he says. “The compensation has just gone through the roof,” which, after all, is where the stars are – when they’re not on TV. “If you’re not on television six to 12 times a year as a fund manager, your fund is probably not selling well or you have a lousy performance.”

One budding star is David Pullman, 36, who last year made British rocker David Bowie an asset-backed security (InvestmentNews, Dec. 15). Mr. Pullman

doesn’t run a mutual fund, but did commoditize the man who fell to earth, selling $55 million in bonds backed by Mr. Bowie’s future earnings.

Next on his platter: a $30 million offering backed by Motown hits written by Edward and Brian Holland and Lamont Dozier.

Mr. Pullman has done so well that his boss, Canadian-owned Fahnestock & Co. of New York, is renaming its structured asset sales unit the Pullman group. Sounds like a sleeper.

Deutsche Bank

über alles…

Only about 10% of investors in the New Germany Fund voted to boot Deutsche Bank Securities Inc. as its manager; only about a quarter approved a nonbinding proposal to make the fund open-ended.

More than half the shares were not voted on either proposal. A real dachshund, the fund has traded at an average discount of 19% over the past 12 months.

…except Switzerland

Credit Suisse First Boston snatched the three most-profitable investment bankers from Deutsche Bank Securities: George Boutros, Bill Brady and Frank Quattrone. They’re technology mavens, with clients like Amazon.com Inc., Intuit Inc. and Northern Telecom Ltd. of Canada. Mr. Quattrone, 42, will run the group, based in Menlo Park, Calif.

For Deutsche, the three arranged more than 100 deals worth $23 billion working free of most Deutsche Bank constraints and keeping part of the action. Germany’s biggest bank lured them from Morgan Stanley & Co. in 1996. But since then the Frankfurt bank has been battered badly worldwide, and it’s firing thousands.

Meanwhile, Credit Suisse Group is running hard to get ahead of the big boys. The stock of Hambrecht & Quist, the 30-year-old San Francisco investment bank with the long Silicon Valley client list, spiked amid rumors of a takeover by – you guessed it – CS First Boston.

It’s Mario’s scenario

Another winner is Mario J. Gabelli. The chairman of Lynch Corp. and founder and manager of Gabelli Funds Inc. came up smelling like roses after the annual meeting of his $160 million closed-end Multimedia Trust Inc. Shareholders, as they did last year, voted in favor of issuing preferred stock. The preferred is already on the market, but a bunch of suits have been filed seeking to rescind last year’s vote.

Job opening

Neal E. Sullivan, 38, for three years executive director of the North American Securities Administrators Association, is quitting at the end of next month. He’ll join Boston law firm Bingham Dana LLP, which has a big regulatory practice for financial companies.

“He’s one of the best political strategists I’ve ever met,” says Mary L. Schapiro, president of the regulatory arm of the National Association of Securities Dealers. William McLucas, ex- head of the Securities and Exchange Commission’s enforcement branch, says, “He pushed states to be more aggressive with micro-cap fraud.”

Higher, faster…

Merrill Lynch & Co. opened its first retail office in Japan, at of all places, Nagano, site of this year’s Winter Olympics. Next is a branch in Otemachi at Tokyo’s main rail station, with 27 other offices to open this month…Lehman Brothers is going euro, but not all the way: All its Continental European stock research will be published in the 1999 currency, and in marks and francs and lire as well. The belt-and-suspenders approach is the way customers want it, says the firm’s head of market research, John Phizacherley…Strong Capital management is merging its $137 million Small Cap Fund (once run by Mary Lisanti, now at Northstar Investment Management in Stamford, Conn.) with its $1.7 billion Growth Fund. The latter is up 26.8% in 12 months; the former, 11.9%…Liberty Financial Cos., back in the hunt for real, is buying San Francisco’s Progress Investment Management Co. No price was given…Cincinnati’s Star Banc Corp. is paying $7.2 billion in stock for Milwaukee’s Firstar Corp. The combined bank will have $38 billion in assets and 568 branches…London’s Daily Telegraph reported that Goldman Sachs Group LP senior partner Jon Corzine wants a $200 million-per-partner cap on any IPO payout. O Poverty, where is thy sting?

Bloomberg News

contributed to this report