Lunch at the Four Seasons with: Denis P. Kelleher
Published by The New York Sun on 2005-03-10
It could be said of Denis Kelleher that he's long been one of America's most successful investors. It could be said he is significantly into Warren Buffett's high-performing Berkshire Hathaway stock. It could be said that he became a partner with Bill Ruane, the acclaimed manager of the renowned Sequoia Fund more than three decades ago.
It could be said that Mr. Kelleher is the energetic chairman of the board of trustees at St. John's University in Queens, where he's taken on the responsibility of helping raise the annual budget of $400 million of the 20,000-student institution.
It could be said that he will be the grand marshal of the St. Patrick's Day Parade next Thursday, an honor that Mr. Kelleher gets quite emotional about and is likely to emote over even more when he walks up Fifth Avenue from 44th Street to 86th Street on March 17.
It could also be said of him that, as founder and chief executive officer of Wall Street Access Inc., he was among the pioneers of the discount trading business.
All of these things, of course, would be accurate in any narrative of his life. But, in Mr. Kelleher's view, these associations and accomplishments would not nearly tell his story as something else.
"What I really would want said about me is that I'm a man who enjoys making money in order to enjoy giving it away," he said over lunch. "I've been very fortunate in life. I'm sharing my good fortune now. Making money continues to be a priority, but, equally, I'm supporting education and the well-being of children. And, I might add, a criterion of 'success' is one's family life. I've been blessed with a wonderful wife, Carol, three children, and seven grandchildren. In the end, family relationships are the most enduring. That's my story, too."
His story is one of an immigrant who came to New York in 1958 from his native County Kerry in Ireland, with $1.50 in his pocket and a determination to make good in this city. Mr. Kelleher, the son of a shoemaker, found work as a runner for Merrill Lynch during the day, at a time when 2 million shares used to be typically traded on Wall Street daily (the figure is now in excess of 1.5 billion); at night he attended St. John's University, which had traditionally attracted immigrant students, particularly the Irish.
"From the very start, I had a passion to succeed," Mr. Kelleher said. "I would often think of Benjamin Franklin's precept that financial security is a great motivator. I had become quite fascinated with investing, with the simple notion of compounding, when I was at St. Brendan's, a boarding school back in Ireland. So you could say that I was hooked on making money right from the beginning."
In his years at Merrill Lynch, and then subsequently with Mr. Ruane's company, Ruane, Cuniff, Mr. Kelleher learned an important lesson that he's done well by in the securities industry.
"I learned that in investing you don't have to hit a home run each time," he said. "You could become very successful by hitting singles and doubles."
There are four other points Mr. Kelleher makes about how success can be achieved in the fiercely competitive world of Wall Street. One is that the investor needs to be constantly on the lookout for business opportunities.
This means lots of reading, and doing detailed research on companies, something that his company is noted for. "Institutional clients need to know where the edge is, and that also a very good reason why research is important," he said.
"The other point is that you must be prepared to work very hard for your clients," Mr. Kelleher said. "The client is everything. I'd do anything for the client. But these days, I see that people on Wall Street don't always take care of clients as they should."
The third point he emphasizes is that savvy investors need to pick the right companies at reasonable prices -- and here he credits both Mr. Buffett and Mr. Ruane for their acumen -- and then sticking with them.
"Rule number one here is, 'Don't lose money,' and rule number two is, 'Don't forget the first rule,'" Mr. Kelleher said. "You've got to be careful about getting involved with too many investments. Warren Buffett often says that you should only invest in about 20 companies in your lifetime. So you need discipline in your investment. And your investments must be easy to understand."
That was one reason why -- like Mr. Buffett -- Mr. Kelleher avoided getting into high-tech stocks during the great Internet bubble of the 1990s. "I just couldn't understand what all the talk of 'eyeballs' was all about," he said.
"And I don't invest in what I don't understand," Mr. Kelleher said.
A fourth point that Mr. Kelleher stressed to a reporter was the importance of hiring qualified people. "I've always taken on people who were a lot smarter than I," he said. "And to my colleagues I say: Dream big, work hard, learn constantly, and have fun."
That exhortation, he readily acknowledges, was first formulated by Peter Drucker, the management guru. Mr. Kelleher adds: "And don't put all your eggs in one basket -- but you shouldn't have more baskets than you can effectively watch."
As he articulates such aphorisms, it's hard for a reporter not to get the impression that Mr. Kelleher is an immensely moral man.
"I learned the value of integrity from my parents," he said. Then he paraphrased the late Albert Camus, the French author and Nobel laureate: "Integrity carries the day."
"What you learn when you're young usually sustains you through life," Mr. Kelleher said. "That's why I feel it's so important to support the advancing of education of our children, particularly from the underprivileged sections of American society."
"It's important that in leading the moral life, one pays attention to giving rather than receiving," he said.
"There's a saying in Ireland that has always guided me, words that flow out of my region that's rich in the tradition of language and music," Mr. Kelleher said. "Eacht slivh luchra."
It means, he said, that charity consists of doing good deeds for others.
"That's been the foundation of my life," Mr. Kelleher said. "And that's what I would like to pass on."
Senior Writer and Global-Affairs Columnist