Oppenheimer 60th Anniversary - 29

which vaulted OppenheimerFunds to new heights.
The January cover of Popular Mechanics that year
featured a blue box, festooned with switches and
diodes, called the Altair 8800 - the first microcomputer. A young Harvard dropout named Bill
Gates and his friend Paul Allen started a company
they called Microsoft. And retail investors, tired of
watching inflation eat away the value of their cash,
increasingly sought vehicles that could provide
inflation-beating returns - leading to the fund
industry as we know it today.

SETTING THE STAGE FOR GROWTH

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The year 1975 marked a major turning point for
Oppenheimer Management Corp. In one of the most
important moves in the Company's history, Leon
Levy, Don Spiro, and money manager Steve Roberts
negotiated with International Telephone and
Telegraph (IT&T) to purchase the Hamilton Fund,
Inc., of Denver. (For a history of the Denver office,
see page 30.)
The repercussions of the acquisition would
reverberate for decades. "We had about 28 suitors,"
said Jim Swain, who was then Hamilton chairman
and CEO. "I talked to a lot of people and decided
that Oppenheimer & Co. was the right fit." Swain
joined OMC, and would play a vital role in the
Company's growth until he retired as chairman of
the board of the Denver-based mutual funds in
2003. The deal also established Oppenheimer
Management Corp.'s presence in Denver, which
would profoundly influence the Firm's development
and culture.
Moreover, IT&T sweetened the deal by including
transfer agent Hamilton Management Corp. - later
renamed Oppenheimer Shareholder Services (OSS)
and then OppenheimerFunds Services - which to
this day provides much of the data backbone for
OppenheimerFunds, Inc. "We knew that it was good
to own your own transfer agent instead of relying on
a third-party agent," said Spiro. "The customer
service was more accountable."
OMC's fund lineup, meanwhile, changed rapidly,
as the Company acquired more funds and evolved
with a shifting industry. In 1975 the Oppenheimer
A.I.M. Fund absorbed I.E. Management's Hedge
Fund of America, the first publicly traded hedge
fund offered in the United States. A year later, OMC's

A New Partnership
1975 Oppenheimer & Co. restructured as a holding partnership owning

a portion of each of three divisions, operating as separate entities: an investment
management company, Oppenheimer Management Corp. (renamed
OppenheimerFunds in 1996); a retail brokerage firm, Oppenheimer & Co.;
and an institutional money management firm, Oppenheimer Capital Corp. n

opportunistic approach to acquisitions again led to
growth when SEC action against Seaboard Corporation opened the door to acquiring Seaboard's
Admiralty, Leverage, and Competitive Capital funds
and merging their assets into the A.I.M. Fund.
The Company also expanded its fixed-income
lineup in 1976 with the addition of the Oppenheimer Tax-Free Bond Fund. One of the industry's
first tax-free bond funds, it appealed to affluent
investors who increasingly sought after-tax income
that could outpace inflation. That move represented
an early step in OMC's successful efforts to carve
out a strong presence in the market for tax-exempt
fixed-income funds, which OppenheimerFunds
maintains to this day through its Rochester Municipal Bond fund lineup.

Oppenheimer Management Corp. to split off from its
parent company, creating the fund family that today
makes up OppenheimerFunds, Inc.
By 1977 OMC's corporate parent, Oppenheimer
& Co., had more than 1,000 employees. OMC's fund
lineup was expanding rapidly, and the Oppenheimer & Co. brokerage was thriving. Meanwhile,
the Firm's principals were becoming increasingly
engrossed in leveraged buyouts.
The Firm's growth brought tensions. In particular,
the partners found that running an ever more
complex company consumed much of their energy
- energy that they preferred to sink into their own

A NEW STRUCTURE
Meanwhile, Oppenheimer & Co. founding partners
Leon Levy and Jack Nash, with the help of CPA
Ira Heckler, began pioneering the new art of the
leveraged buyout (LBO). The group put their first
LBO into action in 1975, when they purchased the
Midwest supermarket chain Big Bear Stores for
$35 million. This initial LBO would go down in
history as a smashing success: Oppenheimer & Co.
eventually sold Big Bear Stores in 1989 for roughly
$3.5 billion - a return of 9,900%. (By contrast, the
S&P 500 gained approximately 900% between the
beginning of 1975 and the end of 1989.) The rise of
the LBO also set in motion the events that would lead

Oppenheimer & Co. restructures itself into an investment
partnership with three subsidiaries.

Oppenheimer & Co. acquires Hamilton Management Corporation,
establishing a presence in Denver.

1975

1976
Steve Jobs (above) and Steve Wozniak establish Apple Computer
Company. In the 1970s and 1980s, new technologies like the personal
computer would greatly increase the speed of financial transactions.

1975-1986

Restructure and Recession * 29

Oppenheimer 60th Anniversary

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