Investment Banking Veteran Seeing Return to Normalcy. (Wall Street West).

THE IPO market may be soft, but Byron Roth, nameplate owner and chairman of Newport Beach-based investment banking shop Roth Capital Partners, has funded two PIPEs (private investment in public equity) and one secondary offering, all in the last several weeks. "I think this is the beginning of the market getting back to normal, from the investment banking perspective," Roth said last week.

Roth lead-managed a $20 million private placement of stock in OSI Systems Inc., the maker of security scanning systems for airports and other transportation hubs. As reported here, Hawthorne-based OSI has been red-hot on Wall Street, with its stock shooting to more than $18 in trading from under $5 on Sept. 11.

Additionally, Roth raised $15 million last month in a PIPE for San Diego-based Alliance Pharmaceutical Corp., a biotech outfit that stepped into a Wall Street manhole when a clinical trial resulted in delays of product introduction. Alliance's stock was worth $55 when the year started, but only $3.32 last week. "Alliance is a turnaround story," said Roth. "We got some VC guys to invest in the Alliance PIPE, something we have never seen before. Since the Web bubble burst, the venture guys want to know what their exit strategy is. With a PIPE, it is simple -- your investment is liquid from day one." Investing in the Alliance deal were Irvine-based VC outfit Ventana and New York-based EndPoint Group Late Stage Fund.

Roth also co-managed last month a $52 million secondary offering for Paterson, N.J.-based Suprema Specialties Inc., which makes and markets Italian cheeses.

Perhaps indicative of the improving public markets, Roth Capital is circulating a red herring for an IPO on behalf of Bothell, Wash.-based cancer-drug company Northwest Biotherapeutics Inc.

Roth is co-managing the deal with New York-based brokerage C.E. Unterberg Towbin (which just hired former Salomon Bros. chairman John H. Gutfreund as senior managing director). The Northwest Biotherapeutics deal will probably take place this month, Roth said.

"This business is cyclical, and you have to keep going back to work," Roth said. "Sooner or later, it will get better. Now it seems like it is."

Separately, Roth Capital has promoted Sheetal K. Patel to the position of biotech research analyst. Also at the West L.A. office are Managing Director Fariba F. Ghodsian and Bonnie Jaffe, making up perhaps the only all-woman brokerage biotech research team in the country.

Diamonds Are Forever

Last week, Tom Weary, founder of the Santa Monica-based money management outfit Diamond Portfolio Advisers LLC, began posting some of his research on Stockjock.com, a place where independent analysts -- "independent" meaning they are not associated with a brokerage -- can post their opinions. (Stockjock.com was founded by Robert Maltbie, whom local brokerage veterans will remember was at PaineWebber in the 1980s. Maltbie went on to become the portfolio manager for Ventura-based Millennium Asset Management.)

Last week, Weary posted a "buy" signal on Southwest Airlines. "The financials are out there, anyone can read those," said Weary. "What we look at is the 'four points of the diamond' -- the vision, the courage (which is sustained effort), the reality (to see without illusions) and the ethics of a company."

What's needed is balance between the four points, Weary said. Some companies, such as Apple Computer Inc., have terrific vision, but fall short on the reality corner of the diamond. Others, such as Houston-based Enron, were short on the ethics corner. "Ethics is even more important than many investors think," said Weary. "As we have seen many times, the numbers are now being restated. If you are investing on the numbers, you better be sure those numbers are right," he said. "And that comes back to ethics."

Weary, a Harvard philosophy major and former chief equities strategist for Farmers Insurance, first selects companies with good fundamentals, in the Warren Buffet-style, looking for long-term investments (in general, selling for low price/earnings ratios). Then he applies his diamond philosophy, borrowed in part from longtime San Jose State philosophy professor and corporate adviser Peter Koestenbaum.

Investors with a cool million can hire Weary; that's his minimum account size. "That's why I started posting on Stockjock.com. I wanted this research to be available to average investors too."

Quick Takes

Industry war horse Neil Dabney, in Los Angeles but working for New York-based brokerage Ladenburg Thalmann & Co. Inc. as a high-yield bond division manager, recently issued a public "strong buy" recommendation on all senior notes issued by Global Crossing Ltd., the telecommunications company founded by Beverly Hills-based Gary Winnick.

Dabney was ever-cautious in his commentary, but offered this sentiment: "This recommendation is based on the bonds' estimated recovery value relative to current prices." The bonds traded last week in the range of 20 cents per dollar of face value...

Staff at Sacramento-based Calpers, the $144-billion-in-assets state employee pension program, have recommended that Los Angeles builder Alan Casden's Casden Properties Inc. receive $70 million to form a fund to build mixed-income housing...

Investor relations outfit Coffin Communications Group, run by veteran William "Bill" Coffin, finds that a greater fraction of its business nowadays consists in relating "intangibles" -- such as value of brand names, patents, corporate alliances or skilled personnel -- to the investment crowd, rather than the old-fashioned numbers, says Coffin ...

The Sherman Oaks offices of Fleet Capital last week lined up $75 million in acquisition financing, allowing Costa Mesa-based Westar Capital, owner of a diversified portfolio of manufacturing companies, to acquire Houston-based Igloo Products Corp., the maker of ice chests, from Brunswick Corp. Fleet Capital coughed up the whole $75 million up front to finance the deal, but has syndicated the financing to four other institutional investors, said John Roberts, Fleet Capital managing director.

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. His new book is "The Pied Pipers of Wall Street: How Analysts Sell You Down the River," published by Bloomberg Press.