Transportation analyst Michael Armellino didn’t have to travel far to find a home in sell-side research; a short hop across the Hudson River was all it took. Armellino was working at Lord, Abbett & Co., a money management firm headquartered in Jersey City, New Jersey, when the sell side beckoned. He accepted a position at Goldman, Sachs & Co. in December 1969.
“In those days, I really do feel, there was a belief that if we did a good job for our clients, success would come,” says Armellino, 71. Goldman’s research department said as much in the business principles it developed — a copy of which Armellino still has above his desk in his home office.
With transformative technology and the coming of age of aviation, airlines were to the late 1960s and early ‘70s what technology companies would be to the 1990s: the hot stocks. But Armellino was skeptical. In one of his first reports as a Goldman analyst, he was negative on the sector. His analysis caused quite a stir, but his assessment turned out to be correct, which helped build his reputation.
“A lot of research reports focused so much on the company and the business,” he recalls. “I tried to focus on the market characteristics of the companies, what drives airline stocks.”
Armellino, who earned an MBA at New York University, debuted on the All-America Research Team in 1972, as a runner-up in Airlines. He fell out of the ranking the following year but returned in 1975, again as a runner-up. He claimed his first No. 1 in 1976, the same year in which he expanded his coverage and appeared as a runner-up in Railroads. “He’s everything an analyst should be,” one backer told Institutional Investor that year, while another declared that “Armellino is the best stock picker of them all.” From that point on he was voted onto the team in both sectors every year through 1990, when he retired. By then he had amassed a total of 32 appearances and 21 first-place positions, more than any other Goldman analyst to date (although fellow Hall of Famer Joseph Ellis comes close, with 19 No. 1s for the firm).
That success was all the sweeter because he really loved the job. “It was enormously satisfying to be competing with people, to be talking to senior executives at major corporations,” he recalls. “You are what the record says you are; you couldn’t hide. My name was on those reports. If I said something stupid or wrong, people didn’t blame Goldman Sachs — they blamed me. If I said something right, that was personalized too.”
Armellino’s retirement proved to be short-lived. In 1991 the firm lured him back to replace Leon Cooperman, who had left to launch his own hedge fund firm, as head of Goldman Sachs Asset Management. He stayed until 1994, then agreed to chair the investment management committee for the $300 million endowment of Hightstown, New Jersey’s Peddie School, his alma mater. The endowment achieved top-decile performance in one-, three-, five- and ten-year returns during Armellino’s tenure, which lasted until 2006, when he retired. In recognition of this achievement, he was awarded the first Thomas B. Peddie Award, the highest honor available to alumni.
