Howard Stein; helped bring investing to general public
NEW YORK - Howard Stein, a former chief of the Dreyfus Corp. who as one of the fathers of the mutual fund industry introduced innovations like the first money market fund with no initial fee, died last week at his home in Southampton, N.Y. He was 84.
The cause was complications of a stroke, his son-in-law Jamie Stokien said.
Mr. Stein was a powerful force in bringing stock and bond investment to the general public. He broadened the mutual fund market by flooding potential investors with direct mail, rather than using salesmen. He helped devise the famous Dreyfus television commercials in which a lion stalks out of a subway.
He not only invented the first “no load’’ money market fund - meaning no upfront fee - but also created the first tax-free municipal bond fund. He was the first to sell an American mutual fund in Japan.
Mr. Stein was adept at picking investments, notably Polaroid in the company’s early days. His instinct to go for what he called “unloved’’ stocks and against market trends was legendary.
“People now realize that Howard is always a step ahead of the market,’’ Barton Biggs, chairman of
When Mr. Stein joined Dreyfus as a young analyst in 1955, it had around $2 million in assets. At the time of its sale to the Mellon Bank Corp. in 1994, it had assets of $80 billion.
During the 1970s, Mr. Stein set up a fund to invest in companies that had shown unusual concern for the environment and for consumers. He recruited people from outside the conventional business world, like the journalist Bill Moyers, to join Dreyfus’s board.
He invited provocative public figures like the feminist writer and editor Gloria Steinem to speak to directors and top executives and offer them new points of view: The Steinem session kept the mostly male group arguing until 1:30 a.m.
Mr. Stein was an early critic of the Vietnam War. In 1968 he took a six-month leave of absence to be chief fund-raiser for Senator Eugene J. McCarthy’s antiwar presidential campaign. He was on President Nixon’s enemies list. and he worked with John Gardner in planning Common Cause, the citizens’ lobby group.
In 1988, Mr. Stein served on the Presidential Task Force on Market Mechanisms, known as the Brady Commission, which investigated the market crash of Oct. 19, 1987, or Black Monday.
Howard Mathew Stein was born in Brooklyn to immigrants from Poland. His family moved around New York, finally settling in an apartment over the Stage Delicatessen on Seventh Avenue in Manhattan.
His parents, a brother, and a sister worked in the garment industry. At age 5, he began to play the violin. He was soon practicing for as many as 10 hours a day and planned to be a musician.
By his own account he pursued his formal education between encounters with truant officers. He attended the Straubenmuller Textile High School on Manhattan’s West Side and the Juilliard School, which gave him a scholarship. He gave up on a music career when he realized he was not destined to be a great violinist.
At 23, he got a job loading steel onto trucks for 75 cents an hour
He looked for work on Wall Street and became a trainee at Bache & Co., where he noticed that responses to sales brochures piled up unanswered while salesmen concentrated on person-to-person contacts. He contacted the writers of those responses and built up a rich commission business.
He left Bache in 1955 because he didn’t believe he was rising fast enough, Time magazine said in a cover article about him in 1970.
He joined Dreyfus and soon became an assistant to Jack J. Dreyfus Jr., the firm’s founder, chief executive, and chairman. He became president in 1965, and chairman and chief executive in 1970.
Mr. Stein’s record of sharp investing included buying New York City real estate at cheap prices during the city’s fiscal crisis in the 1970s. But he was roundly criticized in the ’80s and ’90s for holding back on buying stocks when the markets were surging. When Fortune magazine asked him about this in 1996, he replied, perhaps jocularly: “I was stupid! I wasn’t paying attention.’’
In fact, his conviction that stocks were overvalued saved him from the devastation many of his competitors experienced in the 1987 crash.
In 1994, the Mellon Bank Corp. of Pittsburgh acquired Dreyfus in a stock swap valued at $1.85 billion. Mr. Stein continued as Dreyfus’s chairman and chief executive, joined Mellon’s board, and was reported to have made around $90 million personally from the deal. He resigned in 1996.
Mr. Stein leaves his wife, the former Janet Gelder; five daughters, and six grandchildren.
A former employee of Mr. Stein’s gave Fortune an example of how Mr. Stein’s thinking strayed from the beaten path. At one time, Dreyfus was heavily invested in enterprises owned by the reclusive tycoon J. Paul Getty, and some of them were looking shaky. When Mr. Stein suggested that this employee speak with Getty, the employee replied that “nobody’’ talks to Getty.
“Well, have you tried?’’ Mr. Stein asked. A week later, the employee was in Rome, where Getty answered all of Mr. Stein’s questions.