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in lasting business relationships

Sage, Rutty’s William Holley believes
in lasting business relationships

William Holley refuses to race his grandchildren on the computer.
Chairman of 80-year-old Sage, Rutty & Co. Inc., Holley knows a bad bet when he sees one.
And in any contest of computer ability between his school-age grandchildren and himself, he says, the smart money is on the kids.
But when it comes to making the non-electronic connections that still carry the high-voltage current in the Rochester investment community, Holley is a hard man to beat.
Last year, the venerable stock brokerage that handles more than $250 million in investor assets grew a financial-planning arm, Sage Advisors. It offers a range of financial-counseling services to individuals and businesses, and has some $38 million under management.
But the 66-year-old Holley puts a characteristically simple spin on what the firm does.
He says he minds money for the children and grandchildren of his father’s original clients.
His son, Wayne, is president of the firm and his nephew, Douglas, is on the securities sales team.
All of them grew up in the stock business. And the firm grew up in Rochester making the market for local stocks and bonds. At 41 employees, Sage, Rutty is eight times the size it was when Holley joined.
In the business 40 years now, Holley uses words rarely heard among the investment intelligentsia.
Words like “mistake.”
Point out a questionable position in many stockbrokers’ portfolios and get ready for a display of verbal acrobatics designed to convince the listener that getting in at $30 and out at $12 is absolutely the way to go.
Not Holley. “Mistake,” he says, is the only word for some stocks and bonds that have passed through his portfolio.
And what Holley does when he makes mistakes with other people’s money is equally simple.
If you make a mistake, fix it.
Daily volume on the New York Stock Exchange was less than 3 million shares when Holley started out in 1955. Today, it is a slow day in the market when only 300 million shares are traded.
And more than plain-vanilla stocks and bonds fly around these days. New and different animals like derivatives are on the scene. Holley stays away from financial beasts whose behavior he cannot predict.
Another simple Holley stance, this suspicion of the unknown, has saved his clients unknown sums of money. Derivatives flashed into the market only moments ago, or so it seems to someone who has seen four decades of market action.
Some derivatives caught fire with heavy returns, some crashed and burned, and some are still zinging around. What the experts say now is what Holley said then.
Don’t buy things if you don’t know what’s in them.
No education was required when he started out in the business. Holley had a degree in business administration from Alfred University and a couple of years at a local bank before shipping out for Army service in Korea.
When he returned, he says, the bank could not figure out what to do with him. So Holley took a pay cut and followed his father to work at Sage, Rutty.
Beginning next year, broker/dealers will be required to meet continuing education requirements.
That, the investment firm chief thinks, is a very good idea.
“Investing is a much more complicated business now,” Holley says. “There are people in New York with time to spend creating new financial products. Some of those products are valid. But lots of them are made to meet a temporary need, and are here and gone before anyone has time to figure them out.”
Jerking his client’s money around in hopes of making a killing in strange territory is no more Holley’s style than is charging into cyberspace.
“We do not encourage trading just to trade,” Holley says.
To Holley, “know your client” is more than a catch phrase regulators use to distinguish between bad luck and bad trading.
And from what he knows about Rochester investors, they are a conservative bunch who want to hold on to what they have and pass something on to the next generation.
“Anyone who looks for gold jewelry and flashy cars to locate the wealth in Rochester is going to miss it,” he observes.
Besides quiet money, what Rochester has is a pool of entrepreneurial talent, Holley says, talent that makes his job as a market maker an easy one.
He digs past the balance sheet to find the heart of a company before recommending it.
Again, he uses uncommon words. Management, Holley says, has to be “close” to employees and customers if a start-up is going anywhere. Speaking of a local giant’s metamorphosis, he does not say “re-engineering.” He calls it suffering.
“When you buy stock, you are really buying the management of the company,” Holley says. “It’s the same when you’re dealing with a broker. You are buying his skill.”
He does not want his clients reading the newspapers every day, trying to second-guess the experts on the direction of a company, an industry, the economy.
“That instant-gratification urge that runs our society does not work in life, and it really doesn’t work in the stock market,” Holley says.
Certainly, he adds, there is a place in the investment world for the big discount brokerage houses. As long as the customer knows exactly what he or she is doing and only needs transactions keyed in, why not?
But some of Holley’s most faithful clients are people with long track records of knowing exactly what they are doing in business, specifically in investments.
That corporate executives, business attorneys and business owners shell out commissions for Holley’s trading expertise is understandable. They have the sophistication to manage their own investments. What they do not have is the time.
But what about the likes of RF Communications co-founder William Stolze, winner of an Inc. magazine and Merrill Lynch Entrepreneur of the Year Award, author of a guide to starting and managing a new business, and founder of the Rochester Venture Capital Group?
What makes Stolze dig into his savvy pockets to pay a Sage, Rutty commission when he wants to trade stock?
For that answer, go back almost 35 years to when RF Communications (now a division of Harris Corp.) was Stolze and three other guys who put up $5,000 each to start a company.
RF Communications was one of roughly 100 small companies in Rochester that began offering stock for sale publicly in that era. It was one of the first. And the stock sold very well.
One of the many things RF Communications needed to keep stockholders happy was a ready market for those shares. This is what brought the four people who were RF Communications together with the half-dozen people who were Sage, Rutty.
Holley could produce willing buyers for the stock, so those who held shares had the comfort of knowing they were not stuck with them.
“Finding a broker willing to trade in an unlisted stock was vital to us at that time,” Stolze recalls. “Our relations with Bill were as cordial as they could be, without violating any Securities and Exchange Commission rules.”
The stock’s price rose, and another offering went out–this one underwritten by Sage, Rutty. Within a few years, RF Communications was listed on the American Stock Exchange and no longer needed a local market maker.
Stolze never forgot what he calls Holley’s “great service” in making a market for RF Communications. When Holley needed a hand to finance his purchase of part of Sage, Rutty, Stolze was more than happy to return what he thought of as a favor.
Holley’s father had started out in the stock markets in 1928, survived the crash of 1929 and the Depression, and finally bought Sage, Rutty the year President Harry Truman died.
When the senior Holley died in 1977, William and his brother, Donald, bought the business from their father’s estate. By 1985, William was ready to buy Donald out.
The market maker needed to raise capital. The first people he turned to were the local entrepreneurs he had helped to set up shop. Again, Stolze was one of them.
They stepped up to buy pieces of Sage, Rutty and sell them back to Holley in stages.
Stolze still owns his shares–“Bill pays a nice dividend every year”–and predicts the price will go through the roof when the world changes for small brokerage houses like Sage, Rutty.
Far from being dinosaurs lumbering off to extinction, firms like Sage, Rutty will be able to name their prices to banks looking to get into the stock brokerage business, says the man who has made a career out of spotting opportunity first.
“It turned out to be a very good investment, although I didn’t know it at the time,” Stolze says of the “favor” he returned to Holley.
Favors, it seems, are a natural by- product of hanging around Holley for a number of years. What else is there?
Fishing. And teasing children.
Another RF Communications founder and Sage, Rutty client is not sure which activity Holley likes best. Attorney Herbert Vanden Brul has 35 years of fishing trips and joint family outings to draw on in describing his friend.
Serious as Holley is about business, when it came to the kids, Vanden Brul says, he plays gruff because it gets the biggest laughs.
His games were variations on one theme: lay down silly rules or set up wacky contests, with Holley the judge. Kisses and hugs from him were either punishment for breaking the rules or prizes for winning the contests, Vanden Brul recalls.
Except for the kissing and hugging part, the games Vanden Brul remembers the stockbroker cooking up for the children resemble a stylized version of a day in the life of a stockbroker.
Vanden Brul thinks he might go fishing with Holley again some day. Until a few years back when another Holley fishing buddy died at the age of 90, he accompanied them on trips.
“Bill watched out for him,” Vanden Brul said. “But never let him know.”
Holley does not keep his quiet kindnesses for the old boys, either. Youngsters in their 30s and 40s talk about work he made for them to help them get started, contacts he set up, introductions performed and, always, encouragement.
He credits Audrey, his wife of 44 years, with raising their three children: Linda, 40; Wayne, 39; and Susan, 38. Of course, Audrey ran the most recent family wedding, Linda’s. And Audrey is doing a lot of hand-holding now that all three Holley children decided simultaneously to build houses.
But keeping the eight grandchildren laughing is Holley’s job.
His other job–passing on the collection of friendships and business relationships that is Sage, Rutty to the future–does not have him worried.
When the big banks mow down the regs that keep them out of trading and the Internet sucks up all the simple trading business, Holley says, “at that point we’re going to find out who is better at what.”

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