Discussing Friendship and Madness with my Wall Street Week co-host, Gary Kaminsky
On this week’s episode of my podcast TMI (The Motivation Inside), I had a chance to talk with my good friend of 34 years, Gary Kaminsky, about the reason for his madness. In addition to talking about his ability to thrive amid chaos, we discussed his upbringing, career arc and how he predicted the 2008 financial crisis earlier than most on Wall Street.
Gary is a warm, talented fellow Long Islander who has built a tremendous reputation for himself inside and outside the financial services industry. A big part of why he’s so well-respected on the Street is because of his tremendous work ethic, which was instilled in him from a young age. As a teenager, Gary worked two summer jobs before even learning to drive. During one summer, he would ride his bike six miles to the beach each day to work as a cabana boy, and then pedal back to a local synagogue (Temple Israel of Lawrence, N.Y.) to work as a bus boy and waiter at weddings and other affairs — often not returning home until 1:00 AM.
Some people enjoy calm, monotonous routines in their professional lives, but not Gary. “I get motivated every day by chaos,” he revealed on TMI. “What drives me is that I love to deal with the unexpected, where you never know what’s going to hit you. That’s what pushes me every day.”
Gary’s passion ensures taping our weekly TV show, Wall Street Week on Fox Business, is always an exciting adventure, but I admire his honesty and pursuit of perfection. As Gary said on TMI, “My brother Michael and I grew up in a household where hard work, and the idea that you had to prove yourself on a daily basis, was the norm.”
Gary didn’t originally want to follow in his father Gerry’s footsteps as a portfolio manager. He started out wanting to be an agent or manager in the entertainment industry. After graduating from Syracuse University’s S.I. Newhouse School of Public Communications he traveled to Los Angeles, where he worked in the mailroom at Creative Artists Agency and as an Assistant Coordinating Producer (which he now describes as “a glorified runner”) at ABC.
In 1988, Gary set his sights on the business side of the entertainment world. He developed relationships with executives at Drexel Burnham Lambert, a powerhouse Wall Street firm, who recommended that, since many Hollywood executives didn’t have college degrees, Gary would be unstoppable with an MBA. Gary took their advice and headed back east to New York University’s Stern School of Business, but by the time he received his MBA in May 1990, Drexel — where he intended to work as an investment banker servicing clients in the entertainment industry — had gone bankrupt.
Gary didn’t let this curveball stop him. He was able to get a meeting with Marc Howard, a managing partner at JRO Associates, which at that time was a Tier 1 hedge fund with $100 million in capital. Gary was able to convince him that his experience around Hollywood combined with skills he gained in business school would make him an ideal analyst to cover entertainment companies. Marc bought into the idea and brought Gary into the firm, becoming one of his first great professional mentors. Gary discovered a love for fundamental research, noting that before the Internet and the SEC’s full disclosure regulations, analysts still had the ability to gain an edge over the less-efficient market.
With JRO floundering in 1992, Gary left the firm to team up with his father and brother at Cowen Group. The trio soon moved over to Neuberger Berman, where Team Kaminsky remains a highly successful private asset management group. On TMI Gary talked about the challenge of working with family. The biggest reason why the arrangement worked so well, he said, is because each person had a complementary skillset. “If you’re just going to work with a family member, and they’re just giving the other family member a job, it’s not going to work.”
Gary Kaminsky’s Lessons from the Lehman Collapse
Ironically, Gary’s background at JRO Associates and his appreciation for fundamental due diligence led him to believe something was amiss at Lehman Brothers in the summer of 2007 (Lehman had acquired Neuberger Berman in 2003). During our TMI conversation, Gary discussed publicly for the first time why he sensed Lehman was in trouble.
After two Bear Stearns hybrid fixed-income hedge funds (which primarily invested in subprime mortgage products) collapsed, Gary received a call from a Neuberger Berman managing partner while on vacation in Greece in August 2007. The managing partner asked, “Where are you? [Then-Lehman Chairman/CEO] Dick Fuld is going to have a meeting at his house [in Sun Valley, Idaho] with a handful of executives to talk about what’s happening. We have two planes going out to Sun Valley tomorrow — can you make one?”
Gary made it back to New York City the following day to catch the plane to Sun Valley. Expecting to hear about Lehman’s strategy for weathering the impending storm, he was “surprised to find out it was more of a cheerleading, rah-rah session.” Lehman had survived other market crises in the past, most recently in 1998, and “their strategy was, ‘we’re going to do it again.’” Something wasn’t right.
That’s when Gary and his Team Kaminsky colleagues decided to explore a spinout. I introduced Gary to the banker at Sandler O’Neill + Partners, Bob Castrignano (a previous TMI guest), who put the deal together. Neuberger Berman was not part of Lehman’s Chapter 11 bankruptcy filing, and continues to thrive today.
Gary talked about the lessons he learned from Lehman’s collapse, saying, “The CEO created a culture where no bad news was fed up to him.” While we agreed that Dick Fuld is an honorable, hardworking man, he surrounded himself with too many sycophants who wouldn’t pass on bad news. “You need to have people directly reporting to you who will give you bad news every day. You can’t fix a problem if you don’t know about it,” Gary said.
To hear more from Gary, listen to our entire TMI conversation: https://soundcloud.com/skybridge-insights/11-method-in-madness-with-wall-street-week-co-host-gary-kaminsky
