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Second Acts in Finance: The 5 Most Astonishing Comeback Stories


Tales of the previously powerful being brought down to earth with a thud only to rise again, are irresistible. Here, a "fierce five" of corporate American comebacks.

"Pick Yourself Up, Dust Yourself Off, Start All Over Again."

Nothing is more uniquely American than the sentiments in that song, which served as mood music to Fred and Ginger's fancy footwork in the 1936 movie Swing Time. Even during the depths of the Depression, our enduring national knack for reinvention asserted itself. Whereas failure in many foreign lands is seen as a sort of scarlet letter -- BP Plc's (NYSE:BP) wayward Tony Hayward was quite literally sent to Siberia for his sins at the helm of the oil giant in the Gulf of Mexico -- on this side of the Atlantic we welcome second chances.

Thirty-three years ago this week, Uncle Sam authorized $1.5 billion in emergency aid for a collapsing Chrysler Corporation, yet the inspired alchemy Lee Iacocca would later work on the auto outfit saw him hailed as "Detroit's Comeback Kid." More recently Motown rival General Motors (NYSE:GM), its insolvency and bailout now but a bad memory, is again an analyst darling whose stock surged 42% in 2012 and added on another 7.2% in the opening week of 2013. Donald Trump, having emerged unscathed from two bouts of bankruptcy by 1997, could, with a straight face, call his book released in October of that year, The Art of the Comeback (Times Books, 1997) although, as he has subsequently entered Chapter 11 twice more, the final chapter of that tome is surely still to be written. Stan O'Neal, not long after losing Merrill Lynch (NYSE:BAC) billions with a spectacularly bad bet on subprime mortgages, parachuted out relatively intact and was rewarded for his fuzzy math with a plum assignment on the audit committee of Alcoa (NYSE:AA). John Thain, O'Neal's successor, survived Furnituregate at the firm and is currently rebuilding his reputation in steady if unspectacular fashion as CEO of CIT Group (NYSE:CIT). And American industry itself, as a year-ending cover article in The Atlantic contended, could lay claim to arguably the greatest comeback of all in 2012, when domestic manufacturing enjoyed a stealth resurgence and outsourcing slowly appeared to abate.

There is something inherently irresistible in tales of the previously powerful being brought down to earth with a thud only to rise again. In this, the first full week of New Year's resolutions when we try to turn over a new leaf of our own, we offer a "Fierce Five" of corporate American comebacks. It's a quintet where ruin was followed by renaissance even if, as we shall soon see, the story doesn't always end happily ever after.
Mike Milken

Mike Milken entered the world appropriately enough on July 4, a date that to American ears positively screams clean slates and fresh starts. His affinity for figures was apparent early on; he helped his accountant father fill out tax returns as a kid. A graduate of Wharton Business School, Milken would go on to essentially invent the market for "junk," or high yield, bonds while at Drexel Burnham Lambert. A workaholic, he was typically ensconced in his office from 4:30 a.m. until 7:30 p.m, and such was Milken's innate talent that 17 years of trading reputedly encompassed a mere four losing months. Junk bonds utterly altered the way corporate America raised capital, gave birth to the culture of Wall Street corporate raiders in the 1980s, and funded the breakneck growth of companies including MCI Communications, Viacom (NASDAQ:VIA) and Turner Broadcasting. Ted Turner himself called Milken "smarter than a tree full of owls" while the Washington Post lauded the Californian as "the most influential financier of the postwar era."

For someone who came to symbolize the excesses of the Gordon Gekko "greed is good" leveraged-buyout era, Milken remained "painstakingly modest" according to Connie Bruck, whose Predators' Ball chronicled his rise and fall. Indeed the financier famously eschewed a corner office suite for an iconic X-shaped trading desk, which was reconstituted when Milken moved his operation from New York to Beverley Hills on, yes, Independence Day in 1978. That desk marked the spot where, in 1986, he helped make a hitherto unheralded investment boutique, which was perennially in the slipstream of Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), the single most profitable institution in the entire history of Wall Street. One year later Milken personally took home a paycheck that, even now, appears faintly preposterous -- $550,054, 000, or, as the Wall Street Journal noted, more than it cost to send the space shuttle into orbit.
No positions in stocks mentioned.
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