Gerald Tsai

Gerald Tsai is a Wall Street investment strategist who first came to prominence in the late 1950s as a stock analyst with an aggressive style of quick, profit-taking trading that shook up the rather conservative mainstream of institutional traders then dominant on Wall Street. Since that time, Tsai has regularly achieved high-status, high-profit positions in asset management concerns, many of which were largely of his own making.

Gerald Tsai was born in Shanghai, China, on March 10, 1928. He was educated at Boston University, where he received a bachelor's and a master's degree. Following his graduation in 1951, Tsai went to work for Bache & Company, a brokerage firm, as a securities analyst. He stayed with Bache until 1952 when he was offered a job with Fidelity Investments in Boston as a junior stock analyst. It was with Fidelity that Tsai first began to make his presence in the financial markets known. In a profile in Business Week Ron Stodghill II wrote, "Tsai wowed Wall Street with an unprecedented method of picking speculative stocks for short-term appreciation and selling them the moment their growth slowed. The method shook up the conservative money-management establishment and inspired a whole new breed of portfolio manager."


Investment Manager to Investor

Tsai was named vice-president of Fidelity in 1960, director in 1961, and executive vice-president in 1965. In 1966 he left Fidelity to form his own investment management firm. Using his reputation as a keen trader Tsai was able to raise $247 million in initial investments for the Manhattan Fund, which he managed for the next two years. It was during this period of Tsai's career that he earned a reputation as one of the key players in what was to become known as the "go-go sixties" in the stock market, a time of high profit-taking, an expanding economy, and international domination of American industry.

In 1968, Tsai sold the Manhattan Fund to a giant insurance company, CNA Financial Corporation, for $27 million in CNA stock. Tsai then took a seat on the board of CNA and essentially took control of the company as one of its largest stockholders. Writing in Forbes, Tatiana Pouschine and Carolyn T. Geer described this series of transactions as "a brilliant deal, superbly timed. Tsai had parlayed control of a hot but untested mutual fund [the Manhattan Fund] into virtual control of a giant insurance company." In 1973 Tsai sold his CNA stock when it was valued in the twenties, reaping a huge profit. (Within the year CNA stock had plummeted to under four dollars a share.)


G. Tsai & Company is Born

Tsai took his profits and bought a seat on the New York Stock Exchange, trading under the auspices of G. Tsai & Company. In 1978 he bought a small insurance company called Associated Madison for $2.2 million, with the idea that he could sell insurance through the mail and save huge amounts of money on seller's commissions. He was able to persuade investors that this idea would take off and investment in Associated Madison, largely on Tsai's assurances of profit and his history of providing them, surged. He once again began investing the company's assets shrewdly and also began acquiring other companies. Four years later he sold the company to American Can Company for $162 million. American Can's chairman had wanted to get into financial services and saw the deal with Tsai and Associated Madison as his ticket. Tsai, for his part, saw a subsidiary mail order business of American Can's as a way to expand his mail order insurance business. As part of the deal, Tsai took a position as executive vice-president and, as their largest stockholder, a member of American Can's board. A few years later, Tsai sold to American Can his brokerage business, G. Tsai & Company, for another $3.8 million in stock and a controlling interest in American Can. In 1986, he was named chief executive officer.

Tsai renamed the company Primerica and began building its assets. In 1987 he acquired Smith, Barney, Harris, & Upham, a moderate-sized investment house. Tsai paid nearly double the firm's assets for control, a move that might have proved successful had the stock market not crashed in October of 1987, when brokerage firms throughout Wall Street were devastated by steep losses. In 1988, Tsai sold Primerica for $1.5 billion, or roughly $30 a share--down from the 1987 high of $54.

In March of 1992 Tsai launched his latest investment strategy. He led a group of investors in purchasing a closely held insurance company in Memphis, Tennessee, Delta Life Corporation. Business Week reported that Tsai believes that "financial woes and bankruptcies among larger insurers will cause flight toward safer, untainted companies such as Delta Life. About 75% of its $751 million in assets is invested in U.S. government securities and it has few bad loans." They go on to quote Tsai as saying that in the present cautious investment climate, Delta Life assets "will grow at least 20 percent a year."