I. W. Burnham, Founded Finance Firm, 93
DGH
I. W. "Tubby" Burnham, who started a Wall Street firm in the depths of
the Depression and watched it flame out spectacularly at the height of
corporate takeover frenzy a half-century later, died Monday, June 24,
2002, at the age of 93.
The firm that Mr. Burnham founded in 1935 and parlayed into one of the
most powerful securities giants in the world came to be known as
Drexel Burnham Lambert. In the span of seven heady years in the 1980s,
that firm revolutionized the financial industry by being the moneyman
for dozens of high-profile hostile corporate takeover attempts. In the
process, it brought to everyday parlance such terms as "junk bonds,"
"LBOs," and "corporate raiders."
To some, Drexel Burnham was the sparkplug that reignited a moribund
Wall Street; to others, it was the symbol of corporate gluttony.
The company's success made several people incredibly rich, including
"junk-bond king" and Mr. Burnham's most prominent trader: Michael
Milken. It also made several people nervous, not the least of which
was Mr. Burnham.
Considered one of the industry's most cautious, old-fashioned
managers, Mr. Burnham expressed concern about the rapid changes on
Wall Street, the use of junk bonds to finance billion-dollar deals,
and about the new generation of traders.
"When I went into it, you did everything," Mr. Burnham said in an
interview with the Los Angeles Times. "Now, young kids come out of
college and want to be instant millionaires."
In 1984, near the pinnacle of the firm's success, Mr. Burnham resigned
as chairman of the parent company and cut most of his ties with Drexel
Burnham. Within six years, the man who brought the company fame had
also led it into infamy -- Milken was headed to jail after pleading
guilty to insider trading. Drexel Burnham, fined $650 million for
securities fraud, was bankrupt.
Isaac Wolf Burnham II was born in Baltimore, Maryland. When he was 15,
he contracted typhoid fever and proceeded to gain about 50 pounds,
since a remedy then for surviving typhoid fever was to eat a diet
heavy on fatty foods. Mr. Burnham eventually lost the weight, but not
the nickname.
When Wall Street crashed in 1929, Mr. Burnham was a student at Wharton
School of Business at the University of Pennsylvania. He joined his
uncle's Wall Street firm in 1931 as a $20-a-week messenger boy, then
started Burnham and Co. four years later with his savings and a
$100,000 loan. By the time he retired from Burnham, the company had
annual revenues of $2 billion.
In World War II, Mr. Burnham served as a pilot and base commander in
the Civil Air Patrol. After the war, Burnham and Co. developed a
reputation for astutely investing in European firms.
In the early 1970s, Mr. Burnham began to inquire about a foundering
investment firm, Drexel Firestone. As he became close to a deal to buy
the firm, Mr. Burnham visited a dispirited young bond trader at Drexel
who was about to quit and start teaching at Wharton School.
"'Why do you want to quit?'" Mr. Burnham recalled the conversation in
a Los Angeles Times interview. "He said, 'Because I think Drexel's
going broke; they're not even going to pay me.'
"'It's not going broke; we're taking them over. We're going to pay
you,'" Mr. Burnham told Milken.
Mr. Burnham decided to let Milken take a percentage of his trading
profits.
"The first year, he made $2 million on the $2 million I gave him. The
next year, I gave him $4 million and he made $4 million on that." By
the time Mr. Burnham retired from active trading, Milken was trading
$800 million in bonds daily.
In 1977, Mr. Burnham left his chief executive post to become vice
president of the Securities Industry Association. He remained as
Drexel Burnham's chairman.
Despite Milken's early success, Mr. Burnham warned against depending
too much on junk bonds for revenue, to no avail.
After leaving Drexel, Mr. Burnham and his son, Jon, founded Burnham
Securities and Burnham Asset Management, and he bought his Burnham
Fund back from Drexel. The elder Burnham was the portfolio manager for
the fund until 1995.
M.M. Bell
"DGH" <peri...@eudoramail.com> wrote in message
news:d2b22a7d.02062...@posting.google.com...
> .
>
> I. W. "Tubby" Burnham, who started a Wall Street firm in the depths of
> the Depression and watched it flame out spectacularly at the height of
> corporate takeover frenzy a half-century later, died Monday, June 24,
> 2002, at the age of 93.
>
> The firm that Mr. Burnham founded in 1935 and parlayed into one of the
> most powerful securities giants in the world came to be known as
> Drexel Burnham Lambert. In the span of seven heady years in the 1980s,
> that firm revolutionized the financial industry by being the moneyman
> for dozens of high-profile hostile corporate takeover attempts. In the
> process, it brought to everyday parlance such terms as "junk bonds,"
> "LBOs," and "corporate raiders."
>
> Securities and Burnham Asset Management, and he bought his Burnham
> Fund back from Drexel. The elder Burnham was the portfolio manager for
> the fund until 1995.
<snipped>
The local paper here in Louisville pointed out his local connections. The
family name was originally Bernheim and the Burnhams anglicized it. Mr.
Burnham was the grandson of Isaac W. Bernheim, a German immigrant who was a
Louisville distiller and noted philanthropist. Isaac Bernheim donated many
public statues and artworks and is best known in this area for having
created a nature preserve in nearby Bullitt and Nelson counties named
Bernheim Forest. The local obit for Mr. Burnham said he would be buried in
a garden in Bernheim Forest.
M.M. Bell
mmbe...@xxathena.louisville.edu
Heinz W. Wiggeshoff
...
> Isaac Bernheim donated many
> public statues and artworks and is best known in this area for having
> created a nature preserve in nearby Bullitt and Nelson counties named
> Bernheim Forest. The local obit for Mr. Burnham said he would be buried in
> a garden in Bernheim Forest.
Pushing up the daisies?