Manny Friedman doesn't have an office.
Considered a rising star in the world of investment banking, Mr. Friedman, the chairman of Friedman, Billings, Ramsey & Co., sits on the sun-drenched trading floor, wearing a checked cotton shirt, its sleeves rolled up, and corduroys. He's elbow to elbow with his employees, who sport shorts, or khakis, or jeans. There are no ties-and no suspenders.
Friedman, Billings, Ramsey, based in Arlington, Va., is about as far from Wall Street as you can get-in more ways than one.
But the little known firm is carving more than a niche for itself in the business of bringing thrifts and finance companies to market in initial public offerings. And now it's spreading its wings into the technology sector, mostly serving firms related to the banking industry.
Through its work in the banking sector, Friedman Billings vaulted during the last six months into the top 10 among lead managers for IPO underwriting, according to Bloomberg News. Securities Data Co. ranks it No. 11 for the year to date.
Though trailing venerable firms like Goldman Sachs, Merrill Lynch, and J.P. Morgan, the small but growing firm is proving its mettle in one of the most competitive businesses in the world.
"We don't work harder than they do in New York, and we're definitely not as smart," said Mr. Friedman. "Our culture is the reason for our success."
Founded in 1989 by Mr. Friedman, Eric F. Billings, and W. Russell Ramsey, the firm's first capital transaction, raising $451 million for nearly bankrupt Glendale Federal Bank in 1993, made its name.
By 1996, Friedman Billings had led or co-led 24 equity and debt offerings totaling $837 million, according to Securities Data.
In 1997, through Sept. 18, it had raised a total of $1.92 billion in 17 transactions. Put in perspective, Merrill Lynch & Co., the leader in IPOs, has made 1,400 deals in 1997, totaling $239 billion.
Even so, Friedman Billings "is becoming a powerhouse in the Northeast," said Matthew F. Byrnes, president of Keefe Managers Inc., a New York-based hedge fund and Friedman Billings client.
He called the nontraditional firm a "great source of new ideas. Not only do they find great companies" to invest in, "once they do the deal they stick by the company with coverage and follow-ups."
Fund manager James Schmidt of John Hancock Funds, Boston, said Friedman Billings brings to market companies that are "out of the mainstream." "What distinguishes them is how well a lot of their underwritings have done for investors-with companies not everyone thought would be successful," said Mr. Schmidt.
According to Securities Data, 18 deals the company led in 1996 had averaged a 90% gain through Sept. 17.
Six issues more than doubled in value, while one IPO, Allin Communications of Pittsburgh, lost nearly 80% in value.
Mr. Friedman, son of a southern rabbi, made his first investment in the market with his bar mitzvah money. He bought 10 shares of P. Lorrillard Co., the tobacco giant. The next day the stock jumped $2.62. "I could feel my heart beating as I looked at the stock pages," said Mr. Friedman, who was on a bus to yeshiva.
After a short stint as a teacher, Mr. Friedman joined Legg Mason Wood Walker Inc. in 1973 as a retail broker and began following small thrifts. In 1985 he switched to Johnston Lemon & Co. He left the Washington-based firm in 1989, with 17 colleagues, to form his own firm.
Though gray around the temples, Mr. Friedman maintains his child-like enthusiasm for the business. He gets the same rush from his successes today, at 51, as he did when he was 13.
His excitement is infectious. And it has to be.
He expects a lot from his employees. In return he is loyal at a time when downsizing has prevailed in the industry.
When Thomas Dreyer, a real estate investment trust specialist, had to return to Kansas City, Mo., to care for his ailing father, the company opened an office in there. "We don't believe in letting people go," said Mr. Friedman. "A business has to be a community."
That strategy is paying off. Veteran traders and analysts from Wall Street to California are flocking to Virginia. Donna Joseph, an associate, who arrived recently from Bear Stearns, said she likes the fact that Friedman Billings is small. "There's more opportunity for advancement."
But Ms. Joseph, wearing a T-shirt, jeans, and sneakers, said the casual atmosphere shouldn't be mistaken for a casual attitude.
Burke Dempsey, managing director, recently came to Friedman Billings from Montgomery Securities, the San Francisco firm being bought by NationsBank Corp.
Now bursting out of its two floors overlooking the Potomac River, Friedman Billings will rent two additional floors in January. The company has expanded from 100 employees to 260 in the past year. And growth is expected to continue.
"FBR's people are very aggressive in both the investment banking and institutional sales functions," said a fund manager for one of the largest mutual fund companies in the country. "I'm often persuaded to buy or sell a stock upon their recommendation because of their assertiveness and confidence in their views."
The firm's mergers and acquisitions practice, run by Karen K. Edwards, is another hot property.
She advised BNH Bancshares of New Haven, Conn., on its recent sale to Citizens Financial Group Inc., Providence, R.I.
Patrick McFadden, regional president at Bank of New Haven, said Friedman Billings can spot hidden treasure.
"We were three weeks away from bank failure" in 1993 when Friedman Billings raised capital for the bank through a private placement that spurred a recovery, said Mr. McFadden.
"They were smart enough to see the opportunity and supported us," he said. "We tried lots of other places and couldn't find anyone that had good ideas about salvaging the company. The standard Wall Street answer was, 'Sell.' We would have been crazy to sell then."
The deal with Citizens, a unit of Bank of Scotland, earned the company $15.50 per share, or 2.5 times book value. "They know this business very well," said Mr. McFadden. "They can make quick decisions, and they are tremendously respected by the investment community. They got us a great deal."
The future looks bright for the off-beat investment bank. "Whatever we do, we want to do well," said Mr. Friedman. The firm has opened offices in California, Boston, and London.
While expanding into the technology and real estate sectors and continuing to beef up its coverage of banking and financial companies, Mr. Friedman keeps an eye on the world around him.
His greatest concern, aside from closing deals, is maintaining the family-like atmosphere he's created through hiring young, fresh-from- college employees and giving them responsibility and quick promotions.
"It's a company where people feel we care." he said. "Quality of life is very important." u
