Column: The Corner

In 1948 Charles Henderson borrowed $48,000 from his grandmother to buy a seat on the New York Stock Exchange (NYSE). He paid every cent back to her and was making a whopping $5,000 a year trading on the NYSE floor. Eventually he became chairman of Henderson Brothers, an old-line NYSE Specialist firm that was founded by his great-grandfather, William Henderson in 1861. Charles Henderson died last week on Wednesday, May 29 — and with his death goes a piece of Wall Street history.

Henderson led his firm during a period when NYSE Specialist firms saw a great deal of growth as new listings came to the exchange and the firms were assigned these new listings.

As for specialists, now known as designated market makers, they are independent businesses that operate on the floor. According to NYSE senior vice president of communications, Richard Adamonis, “They are the air traffic controllers for stock trading.” Each stock is traded at a specific location or “post” on the floor of the NYSE. At each post specialists are assigned individual listed stocks. Back in the day, there were some 450-plus specialists. Each specialist would be charged with “making the market” in these issues, which entailed getting the stock opened and closed, finding additional liquidity for a stock should it move in price substantially, executing a variety of limit orders placed on the “specialist book” and other duties. These firms historically are well capitalized based on the number of stocks assigned to them, the price of the stocks and the number of average shares traded on a daily basis. By the late 1980s and ‘90s the specialist business underwent consolidation through mergers and acquisitions. Many of the senior partners of specialist firms made millions during this period. When I first got to the floor there was some 45 specialist firms, there are now only a handful left today.

I remember hitting the floor for the first time in the late 1970s and visiting the Henderson operation at post six under the windows facing Broad Street in the Main Room. Henderson Brothers stood out with likes of La Branche & Company (who bought Henderson Brothers in December 1999), Spear, Leeds & Kellogg, M.J. Meehan & Company, de Cordova Cooper & Company, Robb Peck and McCooey and Phelan Silver, Vesce, Barry & Company, among others. These firms all had size and were staffed with some of the most impeccably dressed folks on the floor — senior folks that had been handling the business of market making for decades. Like Henderson Brothers, some of these firms dated back two and three generations. These people understood the business better than anybody in the world and while they are little known outside of Wall Street, they are powerhouses in the business of market making by providing big time capital to maintain liquidity, depth of market and limiting the market impact of big blocks of stock being bought or sold in their respective issues.

Henderson Brothers was the specialist for 116 NYSE-listed companies. Two of them were listed in the Dow Jones Industrial Average and 26 were part of the S&P 500. Big names like J.P. Morgan, Morgan Stanley, American Express Company and the Ford Motor Company. Eventually Henderson Brothers would be headed by the now retired colorful James Maguire, “The Chief,” who I opined about sometime back.

As for Henderson himself, known as Charlie, he was born in 1924 and grew up on a farm in Orange, N.J. He was a catholic and the oldest of seven children. Henderson was in the U.S. Navy during WWII in the Pacific working with the Naval Air Transport. Eventually he graduated from Seton Hall University and was married 62 years to his wife Mary Louise. The two had six children and 19 grandchildren.

In a story about Henderson in the Palm Beach Daily News in 2011, Ted Weisberg, founder of Seaport Securities who engaged in thousands of transactions with Henderson, was quoted as saying, “It was like playing tennis with a good tennis player. Sometimes you win and sometimes you lose. But it was always fun.”

His son David remembers this about his father, “When he was born, he had big shoes to fill and he filled them better than anyone could have imagined.” In his official obituary it was noted that Henderson “was an honorary member of The Knights of Malta for over 30 years and spent much of his time helping a variety of charities and others in need. He could be found on the dance floor at one of his many favorite clubs including The Everglades Club, The Beach Club, The Sailfish Club, The Palm Beach Yacht Club and Club Collette. Family and friends had many enjoyable evenings together.”

Henderson, like many of his contemporary colleagues, was cut from a different cloth than most. In a time period when the Big Board was at its zenith, in terms of listings and daily trading volume, Henderson and his firm were in top form. His passing is a reminder that the legendary NYSE floor firms were often headed by legendary men that understood the business of risk — right there on the corner of Wall and Broad.

Quote of the week: “It is with deep regret that we learned of the passing of Charles Henderson. It is truly the passing of an era.” — Stanley and Joan Kayne

Bart Ward is the chief executive officer of Ward & Co. Ltd., an Anoka-based registered investment adviser – specializing in the management of stock and bond portfolios in companies which are listed on the NYSE.

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