Fishing with the big boys.

Now that Nate Chapman has gone public, what's up for his stock?

A minnow has set out on the waters of investment banking, where whale-size firms like Goldman Sachs & Co. swim. But to hear Nathan A. Chapman Jr. tell it, there's little or no competition for Chapman Holdings Inc. (Nasdaq: CMAN), which went public in February. After all, the founder, president and CEO says he's working where the big fish don't go.

"We are pioneering a domestic emerging market strategy," says Chapman, whose Baltimore brokerage and finance firm targets capital-starved African, Asian and Hispanic American companies longing for a banking partner. Tapping an underserved market might be just what he needs to thrive. "In today's market two types of investment banking firms will be successful: large, well-capitalized global firms and smaller niche firms," says Michael Flanagan, an independent securities analyst at Financial Service Analytics, a Ft. Washington, Pennsylvania, firm that tracks the industry. "But to win, the niche player has to bring expertise to the table."

The $8 million Chapman raised in his offering should go a long way in developing his niche. The extra capital will help Chapman take companies public as a sole or lead manager. The cash will also help beef up the brokerage's research staff. And an influx of money will help Chapman make a market in company stock it has underwritten.

That's only half of the story. Chapman has an urge to merge and plans to actively seek out acquisitions to broaden its base. The reasoning is twofold. Acquisitions should enable Chapman to entice talent from other firms and at the same time ply new geographic markets.

Last year, Chapman's many ventures helped revenues rise about 4% to $3 million, although net income dropped almost 17% to $336,987. Chapman won't provide any predictions, but he says he expects both revenue and earnings to improve this year. Meanwhile, an earnings drop-off hasn't been a hindrance to the new stock's performance. Chapman shares, after coming to market at $8 each, had risen to $10 as of press time, a 25% increase. No doubt, that makes the boss happy since he still holds 62% of the shares, but it makes the stock a bit pricey with a price-toe-earnings ratio of almost 66 on 1997 earnings. So far, that doesn't scare Barbara Bowles, whose Kenwood Group in Chicago has invested in Chapman. Bowles says she thinks the stock will outdo the bond or money markets. As to the stock market, however, that remains to be seen.

Underwriting money management products is one way to grow earnings. Chapman is focused on managing funds for institutions and individuals alike. His firm handles pension funds for Texaco, provides brokerage services for Smith Barney Asset Management and compiles stock research.

Chapman currently offers four mutual funds. In April, he added the DEM Equity Fund, an open-end emerging markets fund, to the lineup. The fund has over $10 million in assets and invests in minority-and women-owned businesses.

Chapman sees his company playing an important role in the finances of African American investors and the companies they control. So while Jesse Jackson may demand that African Americans make more headway in the brokerage industry, Chapman says he's doing something about it. "He may be the tree-shaker, but I'm the pie-maker."

B.E. BLACK STOCK INDEX
                                                         52-WEEK
COMPANY                             EXCHANGE: SYMBOL   HIGH     LOW

AMERICAN SHARED HOSPITAL SERVICES   AMEX: AMS          $2.25   $0.63
AULT INC.                           NASDAQ: AULT       10.13    4.63
BET HOLDINGS                        NYSE: BTV          61.81   27.25
BROADWAY FINANCIAL CORP.            NASDAQ: BYFC       13.75   10.50
CARACO PHARMACEUTICAL LABS          OTC BB: CARA        1.75   31.00
CARSON INC.                         NYSE: CIC          13.50    5.88
CARVER BANCORP                      AMEX: CNY          17.50    9.63
CHAPMAN HOLDINGS                    NASDAQ: CMAN       10.75    9.00
ENVIROTEST SYSTEMS                  NASDAQ: ENVI       14.00    1.44
GRANITE BROADCASTING                NASDAQ: GBTVK      13.25    8.13
UNITED AMERICAN HEALTHCARE          NYSE: UAH           7.88    1.38

                                    CURRENT
COMPANY                             PRICE(*)    P/E    EPS(**)

AMERICAN SHARED HOSPITAL SERVICES      $1.82   $7.55     $0.24

AULT INC.                               7.82   13.95      0.56
BET HOLDINGS                           61.69   33.71      1.83
BROADWAY FINANCIAL CORP.               13.00   33.33      0.39
CARACO PHARMACEUTICAL LABS              0.97     N/A       N/A
CARSON INC.                             8.75   35.00      0.25
CARVER BANCORP                         15.44     0       -0.27
CHAPMAN HOLDINGS                       10.75   76.79      0.14
ENVIROTEST SYSTEMS                     10.88     0       -0.02
GRANITE BROADCASTING                   11.50     0       -2.93
UNITED AMERICAN HEALTHCARE              1.50     0       -2.19

(*) AS OF 4/20/98

(**) EARNINGS PER SHARE EXCLUDE EXTRAORDINARY CHARGES.

SOURCES: DBC FINANCIAL (WWW.DBC.COM) AND YAHOO QUOTES (WWW.QUOTE.YAHOO.COM)