Ex-Drexel duo hits it big: Neil Dabney and Judy Resnick's brokerage scores by focusing on troubled firms' equities.

"Neil's the car and I'm the gas," is how Judy Resnick sums up the working partnership between herself and Neil Dabney, two former Drexel Burnham Lambert employees whose alliance has forged one of the most successful new brokerage firms in Los Angeles.

Known as Dabney/Resnick & Wagner Inc., the research-driven firm has increased its size from six employees to more than 80 since it started specializing in securities issued by troubled or bankrupt companies three years ago.

Dabney/Resnick has completed nearly $1 billion of business, mostly advisory restructuring work for problem companies or leveraged buyout transactions. The company serves both institutional investors and high net-worth individuals.

In a Beverly Hills office with a view of the company's trading floor (only one block from Drexel's old digs) both Dabney and Resnick stress the equality of their partnership and the different strengths each brings to the firm. Indeed, as if to highlight the equality, their business cards have names, but no titles.

"I'm chairman and CEO and he's president," says 51-year-old Resnick.

She is now possibly the highest ranking woman in the local brokerage world. She is firmly in command of the trading floor, joking with younger brokers, many of whom she fondly calls "the boys."

The average age of employees is early 30s, and there are five other women employees besides Resnick and the company's chief financial officer.

"I tease everyone a lot like a parent," says Resnick. "We have some very young people here. I think it helps to keep the communication going to make them a part of the process and try to build a team. They'll all very bright -- Harvard, Stanford, Wharton, MBAs -- very well educated, but that's not all it takes to be successful in life. It really helps to have communication."

Resnick worked with 40-year-old Neil Dabney in Drexel's high yield bond department. Dabney was hired to manage money for rich individuals, and Resnick established the retail desk to sell high-yield bonds to other institutions. Because their boss thought they'd work well together, he put them in a "space of their own."

The two say they got along because of their "identical values," which they define as being ethical and treating customers fairly. But their relationship really gelled when Resnick asked Dabney to be a trustee for her two daughters.

Dabney says he was startled and flattered that Resnick trusted him with the job. Dabney, despite his success, is a low-key person who seems to have checked his ego not just at the front door but in the parking lot. He credits Resnick with giving him the jump-start to act on many of his ideas.

"Judy's the type, if I have the conviction inwardly, but not outwardly, she'll say, 'OK, let's do it. Let's go with it.'"

However, starting their own firm was a big leap, but in retrospect the idea was one that made sense. Dabney has the strong research background and Resnick has the retail skills. Initially they decided they wanted to leave Drexel and began to seek opportunities at other companies, including Wall Street-based firms, who courted them with big bucks to leave Beverly Hills.

"We were on an airplane and looked at each other, and we thought, 'If they think we're so valuable, why don't we just do it ourselves? Then we can bring our own corporate culture so we could create something we really believed in.' I didn't want to be in someone else's hands again," says Resnick.

Dabney and Resnick started their own firm in July 1989 and got a human capital windfall from Drexel's demise, hiring nearly its entire research department.

Dabney/Resnick has grown rapidly, with many local bankers in town taking notice. When asked, many investment bankers cite the "honesty and hard-working" reputation of the firm, especially the high quality of its research division, headed by David M. Millison, formerly co-manager of the research division at Drexel.

Both Dabney and Resnick have high praise for Millison, but are most impressed by his integrity.

"He would never fudge a report because he wanted to sell or wanted to buy," says Resnick. "Our research is pure."

Dabney said the company puts "swat teams" on credits, which includes both bonds, loans and other types of debt instruments, looking for companies that are undervalued or to see if the market is overreacting to news about a company.

"We know what can go wrong with companies," says Dabney. "That's where we start. What is wrong with this or what is missing. We don't just look for the upside. I would match our research team against anyone in the business."

Although the private, employee-owned company started out on a shoestring, it is now well-capitalized, with revenues increasing 60 percent last year, says Resnick.

The company's corporate finance business grew the most last year and private placement and institutional business are continuing to grow at a fast clip, said Resnick.

Leon Wagner, a former high-yield salesman at Drexel, recently bought into the company and became a principal. In January, Wayne Rogers, an investment adviser and formerly an actor on the TV show "M*A*S*H," joined the firm in the asset management division.

"When we started, we could hardly afford anything," says Resnick, standing in front of the company's burgeoning collection of art photography including prints by Sebastio Salgado and Jerry Uelsmann.

As the company's art increases, so does its business. While the company is a financial services boutique, offering research, sales and trading, investment banking and portfolio services, Dabney/Resnick really specializes in high-yield, distressed and bankrupt securities.

Both Dabney and Resnick feel there is still money to be made in the junk bond market, where yields of up to 15 and 20 percent can still be found.

"The high-yield market will always be here," says Dabney. "I felt that way in 1990, when a lot of people said the high-yield market is over. The high-yield market is entrenched in American society. There is a reason for it."

Dabney compares the high-yield market to the stock market, saying the various types of debt instruments investors in the high-yield market are comparable to the blue chips, penny stock, bankruptcies and anything in between.

"I don't want to go promoting myself here, but I have a good sense of value, absolute value, relative value and risk. I can look at a credit and really ferret out the details very quickly and determine what the actual risk is versus the perceived risk," he says.

Resnick and Dabney are at ease with each other, often finishing stories and sentences.

"Our relationship is like a brother and sister. We have never had a fight," Resnick says. "Neil does not have a big ego, he is not a braggart."

Dabney says, "Judy has taught me how to believe in myself more," adding that, "I believe she could run any company and do it well."

They are sensitive about their Drexel ties, but credit their experience at Drexel.

"I'll tell you, I don't really comment much on the Drexel issue," says Dabney. "Those are memories we choose to keep current on our minds. I think that we established a lot of relationships. Without Drexel, our firm would not be in existence because clearly that's where we learned a lot of what we know."

Dabney grew up in Northern California where his father was an investment banker and his mother a retired school teacher. But it was in Southern California that he met his wife of 18 years, Sharon, with whom he has three boys, ages 12, 10 and 7.

To relax, he runs and practices karate, with some of the company traders. His children are learning karate as well.

"This is a manic-depressive type of business, the highs and lows of the market," he says. "You can be euphoric or depressed and you have to be able to deal with that. Not everybody can. We try to even that out."

Dabney says the company pushes health, and paid for employees to go to a nutritionist.

"We very focused on being fit, because we work so hard. You know, you don't just want to drop dead," says Resnick.

She says one of her company goals is for employees to treat each other well and at least act civilized.

"Trading floors are infamous and notorious. Miss Manners' charm school is not a prerequisite. Now I'm not going to tell you it's not like a football field out there sometimes, but I think we are more civilized than the norm," says Resnick.

She calls being a woman in the still male-dominated bastion of investment banking "a big asset." Resnick says she can say more confrontational things and it is accepted much more readily than if a man were speaking.

"I didn't go to work till I was 40 years old. I didn't have all the prejudices and I didn't have the battle. I was treated very well at Drexel," she says.

For instance, Resnick says when she wanted to move to a position in the high-yield bond department, she came up with a good idea.

"I pitched Mike Milken. He took the meeting, listened to me for 20 minutes, intently, and then they hired me. So I'm a woman, I gave them the idea, they could have let anybody do it, they didn't have to hire me to do it," she says.

Dabney credits Resnick's confidence and tells of the time they went to lunch at the California Club, traditionally a white male club, which used to exclude blacks, Jews and women.

"We walked in -- there's this huge dining room, literally she was the only women in there," says Dabney. "Now if the roles were reversed, it would be somewhat intimidating, but she just handled it."

Resnick advises young women to go into investment banking, cautioning them to "stay a woman" and not become one of the boys.

"You should focus on who you are and where you want to be and then just reach," she says, mentioning her own sense of achievement at what she's accomplished.

"Someone said to me, 'Oh, you've realized your dream,' and I said, 'No, I realized someone else's dream.' This was not my dream," she says.

SNAPSHOT

Neil Dabney

Native of: Fort Ord, Calif. Resident of: Brentwood Age: 40 Education: B.A. in Economics and Psychology from Claremont Men's College, 1974

Judy Resnick

Native of: Elizabeth, N.J. Resident of: Malibu Age: 51 Education: Hamilton High