DEALS IV

Vanities

Multimillionaire Robert Brennan tweaks the Establishment’s blue nose

AS a kid, Robert Brennan used to sneak into Aqueduct Racetrack by crawling under the backstretch fence. Four years ago he bought his first racehorse and impishly christened her New Kid on the Block. Disdaining thirty-three-to-one odds against, he bet heavily on her maiden race and pocketed $66,000.

Now Brennan is a new kid on another block, Wall Street. A boyish forty, he is president of First Jersey Securities, Inc., with thirty-six offices and, he says, 400,000 clients. Brennan owns every inch of the firm, which ten years ago consisted of the founder, a loan, and a suburban office, and he says he has spurned offers of $100 million for it. Fortune puts his net worth at $250 million, but Forbes snubbed him in its listing of the richest Americans. “They put me,” says Brennan wryly, recalling an unflattering article, “on another list.”

First Jersey will spend $18 million this year on advertising, mostly for television commercials showing its president at the stick of his helicopter, hovering over the Erie Canal or the Santa Fe Railroad yards. Brennan likens these technological wonders of the past century to the companies First Jersey promotes today.

When he started First Jersey, Brennan recalls, he had only a few customers. He says he stars in his commercials so today’s customers ‘ ‘can see there’s a human being running this company. Who believes John Houseman when he’s touting stocks one minute and McDonald’s the next?”

Brennan extols stocks like Textone, TransNet, Computer Horizons—high-tech, high-potential, many would say high-risk. “?? isle,” says Brennan with emphasis, “should not be a dirty word."

Why bother promoting the sales of small, volatile companies when they cause so many headaches? “What’s wrong with little companies?” asks Brennan reasonably. “There are 65,000 public companies in this country; only 5,000 of them trade on major exchanges. What happens if nobody makes a market in the other 60,000?” And those venturesome new enterprises provide “half of all the new jobs in this country. Take away all that and you’re in a depression.”

Such views do not endear Brennan to members of the Establishment. He has jousted with the Securities and Exchange Commission when pragmatists would have capitulated. As a result, Brennan’s S.E.C. travails fill a page in the prospectus (where they must be spelled out) for the deal closest to his heart, International Thoroughbred Breeders, Inc.

I.T.B. strikes fear into the breasts of the Jockey Club set. It is a public company which initially bred racehorses and owned bloodstock. The first of its kind when Brennan began selling shares in 1981, it changed its focus by purchasing two racetracks: Garden State Park, in New Jersey, and, just this summer, Keystone, in Pennsylvania. With $100 million in cash and $200 million in assets, I.T.B. is a colossus in what is otherwise a mom-and-pop business, albeit a rich mom-and-pop business.

Racetrack attendance has been sliding for decades, so what makes Brennan think he can succeed? He sees racing’s problems as isolated ones, involving tracks run “like private clubs, not businesses.” He plans to make his tracks “exciting, wholesome places,” attracting the 90 percent of the U.S. population that has never passed through the turnstiles.

Brennan has an ingenuous enthusiasm for the trappings of his new affluence: his gold Rolex, his three hundred Thoroughbreds, the indoor basketball court on his riverfront New Jersey estate. He shows visitors the framed photos of him posed with governors, senators. Vice President Bush. Also on Brennan’s shelves are five volumes on securities law—perhaps a reflection of his battles with the S.E.C., which says First Jersey has used high-pressure selling tactics. As often as not, that kind of charge is settled with a consent decree; the firm concedes no wrongdoing. By contrast, Brennan claims First Jersey is “the only major securities firm in this country that has never been found to violate any securities law, at any time, in any form. ’ ’

If the S.E.C. is critical of Brennan, the investors in I.T.B. adore him—as well they should, since a dollar bet on I.T.B. in 1981 is worth fourteen dollars today. Says one investor, “I was told clearly by the salesman, ‘This stock is speculative. Don’t buy it unless you can afford to lose every cent.’ ”

Don Rosendale