Stock brokerage sings Trilling's praises.

Super-broker Stan Trilling gets to create boutique investment house within Paine Webber 

After Stan Trilling, 55, took a degree in banking and finance in 1961 from the University of California at Berkeley, he applied to one stock brokerage, then another, then another, then finally 35 brokerages, looking for work.

"But nobody would hire me. I was single, hadn't done my military service, had no experience. I was from the wrong side of the tracks," he recalls. "But all I wanted was to be a stockbroker." Instead, needing a paycheck, Trilling took a job selling pharmaceuticals, from doctor's door to doctor's door.

"I was the man who introduced Valium to Beverly Hills," recalls Trilling, of his triumphs as a traveling salesman.

Fast forward to 1993: Last year, out of 5,400 stockbrokers in the vast PaineWebber empire, Trilling did more business than 5,391. Only eight brokers, scattered across the country, generated more in commissions for the national brokerage.

And, in a highly unusual arrangement, he has formed the eight-employee Trilling Group within PaineWebber's downtown branch, where Trilling acts like a boutique investment house -- but with major wirehouse connections.

It's easy to see why PaineWebber gives Trilling room to maneuver -- a portfolio of speculative stocks, put together by Trilling in late 1992, generated a 134 percent return by February of this year.

And a year ago February, Trilling recommended two stocks, CCA Industries (a New Jersey-based cosmetics maker) and Custom Chrome (a Morgan, Calif.-based maker of parts for Harley-Davidson motorcycles) to readers of this newspaper. Combined, the pair of stocks is up 195 percent.

How did Trilling do it, and how does he do it?

Largely by relying on his own instincts and research -- and by taking positions in, or shorting, small companies that nobody else has thoroughly researched. It wasn't always easy (maybe it still isn't; Trilling has had open heart surgery twice).

Starting out was rough, particularly after waiting to be a broker so long. "I had a very painful year, my first year as a stockbroker," Trilling recalls, of the annum he spent with Eastman Dillon (a firm since merged) in 1968, when he finally cracked into the stockbroker business. "I think I made every mistake a broker could make. I was so naive."

Those mistakes, which all investors can make, were due to the following circumstances, outlines Trilling:

No. 1. Brokerage houses sometimes produce research reports that are censored, or even idyllic, because the brokerage wants a investment banking relationship with the company in question. A "buy" recommendation may only mean brokerage A wants to be Company B's underwriter on the next stock or bond offering. No. 2. Brokerage houses sometimes just want to move inventory -- stocks the brokerage owns. "Some reports are optimistic just so the brokerage can sell off its portfolio," observes Trilling.

No. 3. Analysts can be bought. "Sometimes the researchers are crooked," says Trilling. "They can be in on the gag. I've been bilked."

No. 4. By the time everybody knows a company is doing well, it is too late to buy. "A company is doing well, and reporting good earnings, and getting good research reports written on it -- by then it's obvious, the price is already up. That's not the time to buy," snorts Trilling.

Babes in the woods have only one recourse. "Start looking behind the trees yourself," advises Trilling.

And so the Bronx-born, Los Angeles-raised (Los Feliz area) Trilling conducts his own research, and he doesn't play by Marquis of Queensberry rules when poking into a company he thinks may be ready to take a dive.

Private dicks and financial shamuses can be called upon to help unwrangle the true story of a company's potential fortunes. "Oh yeah, you want to talk to ex-employees, the disenfranchised, others who may know what is going on behind closed doors," says Trilling.

The wary Trilling has even put onto a monthly retainer Howard Schilit, who authored the book, "Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports." Schilit, also a professor at American University in Washington, D.C., peruses funny numbers Trilling sends his way. But beyond the numbers, Trilling's big concern is the company's leadership. "In real estate, it's 'location, location, location.' In stocks, it's 'management, management, management.' A company cannot do well without good management," Trilling avers, raising his eyebrows and opening his eyes wide, as he does when making a point.

Trilling is a proponent of the "skunks don't change their stripes" school of investing: If a management team has been crooked at one locale, they'll likely foul up the next nest they occupy.

From personal experience, Trilling knows how hard habits die: Behind Trilling and his widening eyes, on the wall next to his desk with the four flashing computer screens, is a crushed cigarette, neatly framed.

The Marlboro Light carries a typed inscription, "The Last Cigarette," and is dated "1:43 p.m., May 15, 1993," and signed by one Stan Trilling.

The vow and the crushing of the cigarette has been witnessed by a Walt Haddad, according to ac-companying documentation.

Trilling lights up a few moments later. "Yeah, I guess I started smoking again," he says. "I also like wine a lot."

Indeed, Trilling also professes a love of sports, jazz, has been married for 32 years "to the same woman" and has two grown children, whom he calls the "light of my life."

He is widely traveled and takes a month off each year to see the world beyond Wall Street -- but one wouldn't know it from talking to him. Conversation is always stocks, and killings to be made, frauds to be exposed or battles lost and won. Past the half-century mark and wealthy, he could easily retire, but doesn't. He says what really makes his blood rush is to be right on a stock -- when the "market," or general consensus, said he would be wrong.

Dan Winters, a broker and researcher who works for Trilling, concurs. "Trilling is extremely focused, maybe hyperactive. What does he like? He likes being right on the market (a stock). When we are going against the market, but we are right -- that's when he gets excited. He goes bananas."

It's the banana-factor that keeps Trilling going, to get up in the gloom of 4:30 a.m., to pilot his new teal Lincoln Marquis (Trilling calls it "my middle-aged muscle car") to work, from Santa Monica.

And now Trilling is excited, as he peers at a computer screen, which flickers a listing of stock prices. A stock Trilling is short on (in early February) is trading down. The company, Minneapolis-based Education Alternatives, had recently announced earnings, which were cruddy but better than expected.

Trilling pored over the earnings, ferreting out that the company has actually lost money on operations. The reported profits, it turned out (after questioning company management), came from trading profits on a bond portfolio -- likely, a one-time shot.

Trilling told the company they should put out an announcement clarifying the true nature of the black ink. Education Alternatives complied, and the stock tumbled -- to Trilling's earthily expressed delight.

When prodded (lightly), Trilling will expound the "Trilling Truths" -- conditions to be met before Trilling will buy a stock:

1. Company has to have excellent management, which is motivated by owning stock or options. "I want management to become multizillionaires if the company is a success. Just bring me along for a ride," says Trilling.

2. No more than 5 percent of a company's stock can be owned by institutions -- in short, the company should not be well-known. By definition, that will be a small cap stock.

3. The company should have little or no debt.

4. In some way, whether by product or marketing strategy, the company should be unique and not easily imitated.

5. The company should have growth potential, which is largely ignored on Wall Street.

After all that, Trilling will meet with company management and try to determine the odds for success. One thing Trilling tells them: "I will not tolerate deceit."

Too, Trilling asks for no surprises. "As an investor, I can live with a series of disappointments, punctuated by a few victories. I just don't like to learn that the whole story hasn't been told to me."

Stan Trilling

Resident of: Santa Monica Native of: Los Angeles Age: 55 Education: B.A., University of California at Berkeley, banking and finance.