Charlie's Profit Instinct

One of the least known men on Wall Street is slight, balding Charles Allen Jr., 60. His investment banking house, Allen & Co., belongs to no stock exchanges, seldom joins in a syndicate deal with other houses. But few men on the street have as much wealth and power as this former brokerage-house runner. As the major and often controlling stockholder of half a dozen important companies--in steel, shipbuilding, chemicals, drugs, insurance and other industries--Allen & Co. supervises their financing, advises their managements, and devises new ways for them to profit.

Last week Charlie Allen qualified as Wall Street's most happy fella. Ogden Corp., which he controls and has transformed from a loose holding company into a carefully diversified profitmaker, reported nine-month earnings up 260% to $2,000,000. Other companies in which he holds a big interest--Colorado Fuel & Iron, American Bosch Arma, Warner Bros. Pictures, Teleregister--were also doing well. The star performer was his Mexico City drugmaker, Syntex. On the American Stock Exchange, Syntex shares have risen from $35 in January to $249 last week. With a controlling 25% of the stock, Allen has earned a paper profit of $12 million on that one company this year.

Quick Turns. How does Allen pick the winners? "I have hunches," he once explained, "a feeling backed by common sense. I never buy anything without that feeling--and of course there is always luck, most everything is luck." But not all. A lone wolf, who operates with his brother Herbert as his only partner, he sizes up a situation's profit potential and often commits his capital in a matter of hours. If the deal goes sour, he gets out just as fast. The decision to buy into Syntex, which he first read about in FORTUNE, came within half an hour after Allen had analyzed its balance sheet.

Syntex had been doing modestly well extracting male and female hormones from the barbasco (giant Mexican yam) and supplying them in bulk to other drug firms. Its bulk hormones are still the base for several birth-control pills, but Allen also had Syntex place greater emphasis on its own brand-name ethical drugs, which now account for nearly 80% of its business. Profits last year rose more than fourfold, to $3.7 million.

At Ogden, Allen staved off an attempt to liquidate the company's assets a decade ago, has diversified it into plumbing supplies and filters, also bought New Orleans' Avondale Shipyards, now the nation's most profitable big shipbuilder. Generally, Allen gives management a free hand, but he also roots out failures. Says Ogden Vice Chairman Maurice Sindeband: "If things are going badly, he will come around and ask, 'Why aren't you making any money?' "

Back from the Crash. Bronx-born Charlie Allen left high school to start at the bottom in Wall Street. At 19, with $1,000 in savings, he opened his own bond trading business, was later joined by his younger brothers Harold and Herbert. By 1929 they had "nickeled-and-dimed" their way to their first million, then lost it all in the crash. Charlie's instinct for profit has served so well since then that, his personal worth is close to $500 million.

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