Rainmaker, 105, still invests

Ex-head of Kidder, Peabody continues to pick winners, mostly foreign stocks

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August 31, 2006|By Christine Harper | Christine Harper,Bloomberg News

Albert H. Gordon took over Kidder, Peabody & Co. in 1931, turned it into an underwriting leader on Wall Street, and saw opportunities overseas before many rivals.

He's still looking abroad at the age of 105.

After eight decades as an executive and investor from the roaring 1920s to the age of terrorism, Gordon says he's "bearish" on U.S. stocks, partly because of the $8.41 trillion national debt. He prefers shares of foreign companies such as Canada's EnCana Corp., Wal-Mart de Mexico SA de CV and Petroleo Brasileiro SA.

"At least three-quarters of whatever I own is foreign stocks," he says from his Manhattan apartment overlooking the East River.

Gordon, who has outlasted Wall Street staples such as ticker tape - and outlasted Kidder, Peabody as well - is a role model even to octogenarian elder statesmen such as John C. Whitehead, who once was co-chairman of Goldman Sachs Group Inc., and former President George H.W. Bush.

This year, Gordon stopped going to the office at Deltec Asset Management, where his son John is senior managing director.

A marathon runner into his 80s, Gordon now has a hearing aid and walks with a cane and assistance from a nurse. His opinions are still sought because he's one of the few living Wall Street investors who worked in the years leading up to the stock market crash of 1929.

While his three current favorite stocks each climbed at least 13 percent this year through yesterday - almost triple the 4.5 percent gain in the Standard & Poor's 500 index - Gordon built his reputation as a salesman rather than as an investor, says Whitehead, 84.

"He was a famous business-getter," says Whitehead, a former rival. "Work hard and never give up; those were very valuable lessons I learned from trying to compete with him."

Whitehead, who joined Goldman Sachs in 1947, remembers vying for clients against the more experienced Gordon. He recalled that Gordon's relationship was so close with 3M Co.'s then-chief executive William L. McKnight that Whitehead says he focused instead on cultivating the next generation of executives. It didn't work right away, he says.

When McKnight died, Whitehead says, his will stipulated that Gordon and Kidder, Peabody should handle any sales of McKnight's stake in 3M.

Gordon's influence also extended to the highest levels of the U.S. government. He befriended Prescott Bush, a U.S. senator from Connecticut from 1952 to 1963 and grandfather of President George W. Bush, and served as a role model to George H.W. Bush, the 41st U.S. president.

"He taught me a lot about ethics and values," says George H.W. Bush, 82, of Gordon. "He's a very energetic man of great character."

Gordon, the son of a successful leather merchant in Boston, graduated from Harvard University in 1923 and from Harvard Business School two years later.

Today, one of the main thoroughfares into the business school is Albert H. Gordon Road in recognition of his advice and donations over the years.

"Al Gordon was a master salesman," says Samuel L. Hayes III, 71, an investment-banking professor emeritus at Harvard Business School who met Gordon in 1961. "He was an effective rainmaker long after he ceased to manage the firm on a daily basis."

As a bond salesman at Goldman Sachs in the 1920s, Gordon says, he considered stock values excessive and steered clear of the market before it crashed. That helped him a year later in 1930 to capitalize when a Harvard classmate, Edward Webster, approached Gordon to help rescue Kidder, Peabody, a Boston brokerage.

They moved the firm to New York, and Gordon would go on to become the firm's senior partner and biggest shareholder, having built its sales and underwriting divisions. Gordon expanded the company nationally and internationally, taking airplanes to see clients when his competitors were more comfortable on trains like the 20th Century Limited to Chicago, he says.

"People wouldn't fly," he says. "So there was virtually no competition."

With the advent of jet travel, he flew to Japan with his wife "to see if the people were friendly," paving the way for an expansion in Tokyo.

"We did a tremendous amount of business in Japan," he says. That followed expansions in Asia and Europe in the 1950s, he says: "We were the first people to have an office in Hong Kong, the first people to have an office in England."

Gordon began turning over chief executive officer duties at Kidder, Peabody to Ralph DeNunzio in the 1970s, remaining as chairman. In 1986, Gordon helped engineer the firm's sale to General Electric Co. and remained at the firm until 1994, when GE sold the company to PaineWebber Group Inc., now part of UBS AG of Zurich, Switzerland.

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