About Stoever Glass
That June day back in 1964 seems a lifetime ago when, after estimating expenses over and over, we rolled up our sleeves and opened for business.
It was a beautiful late spring day, and the birds singing in historic Trinity Churchyard just outside our windows belied the fact that we were engaged in one of the most competitive businesses in the world. What a thrill it was to match wits with giants like Merrill Lynch, Goldman Sachs and Chase Bank and to see the first hints of success.
When we began in 1964 there was only one other financial institution that specialized in municipal bonds for the individual investor. So in a sense we were pioneers in the field. Back then, municipal bond dealers dealt with large institutional accounts such as banks and insurance companies. And, while the brokerage houses sold municipals, it was only for a few of their very wealthy clients. So most stock brokers knew very little about municipals. Individuals also knew very little about municipals.
Then, as bracket creep took effect, individual investors in the 50% tax bracket began to appear in significant numbers. Predictably, for the sake of convenience, many of them turned to the brokers who already handled their equity accounts. But, stock brokers were not municipal bond specialists.
We wanted each and every one of our clients to have a portfolio that we could be proud of and that our clients would be successful with. We wanted satisfied customers that would keep coming back to us. So we began by constructing our inventory using a widely diversified selection of bonds specifically suited to the special needs of individual investors—not banks and insurance companies. We bought bonds that we ourselves would be happy to own again someday, if necessary, because right from the beginning we made it a company policy to bid a market price for any bond we sold to a client.
To foster an educational program for the Stoever Glass client, we published special educational reports. From the beginning, each was designed to teach an important phase of the business, to explain the advantages and disadvantages of one type of bond compared to another, and to show our clients how to avoid some of the most common and most costly mistakes.
The centerpiece of our educational program became our "Municipal Bond Portfolio Kit." Using model situations, it shows how to construct a portfolio that will give each and every investor the most for each investment dollar—based upon their personal circumstances. And municipal bond buyers have found it to be an important educational tool. We think that what Garlan Morse, President (retired) of GTE Sylvania, said about it only gives an inkling of its true value.
Garlan Morse, President (retired) of GTE Sylvania
“The Portfolio Planning Kit by Stoever Glass showed me how to profit much more from municipals. It was totally different from anything I had seen.
“In one hour, I learned more about municipals than I knew after ten years of buying them.”
“It wasn’t the usual beginner’s brochure. So, for someone like me, it was just right. Sure, I bought a lot of municipals, and I had a pretty good idea of what I was doing. Yet I often wondered if I really knew as much as I should. That’s why I sent for the Stoever Glass Kit. And when I read it, I knew I had done the right thing.”
“It showed me how to use The Bond Buyers’ Index. How to spot bargains in the market. When to buy premiums. Long Term or short term. Notes or bonds.”
“I found the kit so valuable that I insisted my wife read it too, and I’m keeping our copy in the vault.”.
The results of this testimonial may not be representative of the experience of other investors.The results demonstrated in this testimonial are no guarantee of future performance or success.
The bond business has grown and changed dramatically over the years and we've grown, adapted and innovated some of those changes. As with any corporation successful enough to be in business for many years we've had our share of highlights. Like the time in late 1976 when Steve Hueglin, a young Stoever Glass representative, made a startling discovery for us while on a routine search for undervalued bonds. It was in the midst of the New York City crisis and New York City bonds were commonly trading at 30 to 50 cents on the dollar in the secondary market. Looking for a way that our clients could take advantage of these bargains with the least possible risk. Steve looked at New York City's $67,000,000 Housing Authority Bonds, reasoning that this special group of bonds might have two levels of coverage—rental income as well as the city's guarantee and therefore, present the best opportunity for our clients to take advantage of these depressed prices.
What we found proved much greater. All of this searching eventually led to the discovery that these issues were actually guaranteed by the Federal Government. Our discovery made national news and resulted in a $15,000,000 windfall for New York City Housing bondholders.
Forbes - February 1977 "LAZARUS" BONDS
In mid-January, lawyers for the Department of Housing & Urban Development verified a startling discovery: $67 million worth of New York City Housing
Authority bonds are fully guaranteed by Uncle Sam, not New York City's hard pressed treasury. The bonds came back from the dead like Lazarus. Moody's immediately upped its rating from Caa (very bad) to Aaa (the very best)-which is the sharpest rating change in the bond business' history. Before the discovery, many of the bonds had traded at less than 30 cents on the dollar. Since the discovery, holders of the issue scored a $15-million paper profit. Responsible for this $15-million discovery was the Wall Street municipal bond house of Stoever Glass & Co. How did Stoever Glass beat such giants as Merrill Lynch and New York's big banks (not to mention Moody's and Standard & Poor's)?
Deep digging, says President Frederick J. Stoever, "We got interested in Housing Authority bonds because they seemed to have two levels of coverage: the city's guarantee and certain real estate properties. As we looked more closely at those properties, we found that starting in 1968 many of the projects had been converted from New York City to Federal Government programs.” Municipal bond legal specialists at Mudge, Rose, Guthrie & Alexander agreed with Stoever Glass, and last month's HUD announcement confirmed it.
Excerpted in part from a 1977 Forbes Magazine article.
Did Stoever Glass make a killing from its legwork? Fred Stoever says no. The firm owned none of the bonds itself and did not purchase any for its own account.
FORBES asked Fred Stoever if he thinks other cities' housing bonds may also have Uncle Sam's backing. "I doubt it," Stoever replied. "This is the first time in the history of the municipal bond business anything like this has happened. I think it is very unlikely to happen again."
A few months later, James F. Musson, manager of our underwriting department, discovered that due to an oversight, an issue of Baa rated Hazlet, New Jersey bonds—although included under State guarantees—was not rated accordingly. As a result, Hazlet bonds jumped three ratings to their true value.
Mr. Musson, whose long and distinguished career began at Lehman Brothers in the 30's, was personally involved with setting up many of the laws and procedures for municipal financing in the state of New Jersey. So he was probably the most likely person to find this needle in the haystack.
As with the New York City Housing Auth. bonds, Stoever Glass elected to take no financial gain for our research.
But these highlights are simply the more spectacular reflections of everyday occurrences at Stoever Glass. All of our salesman, traders, research people and underwriters are constantly on the lookout for undervalued bonds—the best buys for your money. And we pick some out of the marketplace almost daily.
We are convinced that Stoever Glass is one of the most difficult places on Wall St. to get a job. Because unlike some major brokerage firms, where it is almost imperative that you have an MBA from Harvard, Wharton or Stanford, etc., Stoever Glass has always taken a different approach. While we have had our share of people from Harvard, Wharton, Princeton, Wellesley, Amherst and so on, we also select from large state schools and smaller, less well-known colleges. However, we do subject all applicants to very extensive testing, including mental ability, aptitude and psychological testing. We insist on very high scores in each area and a cluster of strengths is always much harder to find than strength in one or two areas. This method of selecting well rounded people has worked well for us and has directly led to some of the accomplishments we're most proud of.
We mention these small anecdotes even at the risk of sounding a little boastful, because it will give you some insight into the type of company we are.
Business changes with time and as many of you know from first-hand experience, a business has to change with the times. So over the years as we have grown we have added a few new products—not at the expense of our expertise in the municipal bond business, but rather as a complement to it. We added Ginnie Maes, which did very well for our clients. Particularly, those we were able to convince that premium—short average life Ginnies were best. Those clients earned much more than equally secured Treasuries of similar maturities. We also introduced high-grade corporate bonds and Sallie Maes denominated in foreign currencies such as Australian, New Zealand or Swedish.
We've come a long way since that day in 1964. We've added thousands of clients and over 98% of them have done repeat business with us. We have witnessed the demise or takeovers of such giants as Goodbody & Co., DuPont Gore Forgan, Hornblower and Weeks, E.F. Hutton, The Franklin Bank, Thomson McKinnon and many more, both large and small. We have survived two major spinoffs, and we have continued to grow and emerge stronger each time. We have anticipated and adapted to changes in the industry, and prospered through it all.
As we have always done, Stoever Glass will continue to emphasize education and the development of new strategies so our clients get more out of the products we offer.