Gordon McBean, who rebuilt research at Roth Capital Partners LLC from the lows of 2002, now is looking to make the Newport Beach investment bank a player managing money for rich folks.
McBean is starting an asset management business at Roth Capital, seeking to handle money and investments for people worth $10 million on average.
But Roth Capital admittedly is late to the wealth management party. Orange County is teeming with banks and financial firms that manage money for the wealthy here. They include big names, such as Bank of America Corp. and Merrill Lynch & Co., and a host of other players.
To catch up, Roth Capital is looking to possible acquisitions or to ally itself with a firm that works with family foundation and investment offices.
“That’s what is taking up all of my time now,” McBean said.
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Hoss: still to follow consumer, e-commerce companies |
McBean’s boss, Chief Executive Byron Roth, said an acquisition in San Francisco is imminent, though he declined to elaborate.
As for the move into wealth management, “We talked about it for more years than we’d ever admit without making anything happen,” Roth said.
Roth Capital has taken baby steps.
The company is an investor in a money management startup in Milwaukee, Cortina Asset Management LLC. Former U.S. Bancorp portfolio managers formed Cortina early last year.
Roth Capital is looking at other areas, including New York and Boston, for possible acquisitions, according to McBean.
Besides Milwaukee, Roth Capital already has offices in Los Angeles, San Diego, Seattle and Salt Lake City. The Utah tie comes from Zions Bancorp, which bought a 24.5% stake in Roth Capital four years ago.
Roth Capital also has its own contact list to mine. Potential wealth management clients include executives at companies Roth Capital works with, or investors who may call on the investment bank for help selling restricted stock, such as shares acquired in a private placement.
McBean’s track record includes an expansion of Roth Capital’s research staff in the past four years. He joined during the technology meltdown of 2001. Back then, Roth had just eight people in its research unit, versus 34 now.
Replacing McBean in research is Russell Hoss, a 29-year-old who used to work on communications satellites in the Air Force.
Hoss, a former analyst trainee with Nicholas Applegate Capital Management in San Diego before joining Roth Capital as an assistant director of research, said he doesn’t plan any big changes.
“I’m a maintenance manager,” he said.
Something Hoss plans to keep: a tradition of taking his research staff out for a big bash after getting through quarterly earnings season.
Next week, the research department plans to skip out of work early to head off to Laguna Beach to toss a football and barbecue. Prior retreats have involved bowling, darts and golf.
The boom of the late 1990s and early 2000 saw Roth Capital become a big underwriter of tiny companies wanting to go public. The investment bank went on to cover many of the companies it took public, as well as others.
But there haven’t been many small companies going public during the past few years.
“It was a different world in 2000 and before,” Roth said. “Then the two years that followed (2001 and 2002) were just the toughest years I’ve ever had in this business.”
After the recession, research was cut back. McBean started rebuilding in 2002. The department now has about 15 senior analysts, including Hoss, who covers consumer and e-commerce companies.
Roth Capital has turned to other business. The biggest piece has been helping small public companies line up investors without having to do big follow-on offerings. Such deals, dubbed private investment in public equities, or PIPEs, leave it up to a company issuing stock to file a registration statement with the Securities and Exchange Commission within 120 days.
Most companies raise $5 million to $20 million in the placements. Last year, Roth Capital did 47 such deals worth $676.3 million.
Rivals include JMP Securities LLC and ThinkEquity Partners LLC, both of which are based in San Francisco, and Needham & Co. LLC of New York.
