Very Fancy Returns

Joan Lappin vividly remembers her introduction to the men's-club world of Wall Street. The year was 1967, and in her first job as an analyst at Equity Research Corp. she had to attend a meeting at the New York Stock Exchange. At that time, no women were allowed in the Big Board's lunch club, located on the same floor as the conference room. So, security guards wouldn't let Lappin in on that floor. She then took the service elevator with a couple of janitors to avoid being seen by the lunching brokers. No wonder Lappin now gets a kick out of declining lunch invitations at the Big Board.

Not that the president of Gramercy Capital Management Corp. defines power solely in such terms. Mainly, Lappin sees it as making money for clients. And that she does. In the six years since she founded Gramercy, Lappin has chalked up a compounded annual total return of 44.1%, far outpacing the 15.8% gain in the Standard & Poor's 500-stock index. Gramercy's assets under management have ballooned from less than $1 million in 1986 to $253 million at yearend, 1991. The clientele includes Bankers Trust, Safeway, and Gannett. Gannett CEO John J. Curley was so impressed with Lappin that he gave her some of his own money to manage.

CLOSE TRACKING. Gramercy's method is to invest heavily in stocks that Lappin believes are grossly undervalued--primarily medium-capitalization issues. Gramercy portfolios typically own only 15 to 20 different stocks, vs. 50 to 100 in other portfolios at firms of equal size. Crucial to the strategy is microscopic monitoring of each stock and a long-term outlook. "The quarterly performance derby that the Street is caught in is a loser's game," Lappin says.

It's a risky approach, but clients such as Knight-Ridder Inc. aren't complaining: "Joan is one of the most cunning, intuitive, and shrewdest investment pros on Wall Street," says CEO James K. Batten, a fan of Lappin's from her days as a media securities analyst. Lappin spent 13 years analyzing stocks before switching to portfolio management at Manufacturers Hanover Trust Co. in 1983. Joining Manny Hanny was a sort of vindication. Back in 1965, she had been fired as a secretary there. Sensing that she was bored by the job, her boss advised her: Don't work as a secretary ever again. For Joan Lappin, that's turned out to be a pretty good tip.

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