Since moving to Florida - Jacksonville was home to a brother, sister and in-laws - Dahl has built an investment firm, James Dahl & Co., which has grown to manage about $500 million, including $300 million worth of timberland owned mostly by private pension funds. Today, Dahl says Milken and Drexel are closed chapters. "I'm no longer selling myself as a Drexel Burnham guy. I'm now selling myself on my own record."
But despite his growing financial clout in the state and a blemish-free record with the Securities and Exchange Commission, some firms still shy away at first when Dahl shows interest. And even as Dahl's adopted city has provided him a base from which to invest in deals all over Florida and the U.S., Jacksonville's cliquish business establishment has warmed to him slowly - he has yet to be invited to sit on the board of directors of a Jacksonville company or even a major community group, for example. A decade after Drexel's demise, the association with Milken still casts a shadow across Dahl's career.
Now 44, Dahl is a sandy-haired, Robert Redford lookalike who grew up in Miami and Naples and was graduated from Florida State University's business school. Known for an intense, focused manner at both work and play, Dahl keeps fit partly by playing in pickup basketball games once a week. Work associates say he can digest lots of information and likes to cut to the heart of an issue. At times, he can be painfully blunt, a trait exaggerated by his fixed, steely gaze. "He doesn't sugarcoat anything," says Randal Ringhaver, president of Jacksonville-based Ring Power Corp. and a former chairman of the Jacksonville Port Authority who met Dahl on a quail hunt several years ago.
Dahl also appears to have a compassionate streak: When an assistant at his firm couldn't find an adequate day-care facility for her newborn, Dahl allowed her to bring the baby to work. "That really reflects Jim," says Arthur Cahoon, a CPA who joined Dahl's firm six years ago after the two became acquainted through their daughters. "He does a lot of stuff behind the scenes for people and organizations."
For his part, Dahl prefers to talk about investing. His investment firm, he says, operates in three areas: It provides venture capital and pre-IPO financing to promising companies; it owns and manages large tracts of timberland located in the Southeast; and it runs a $25 million hedge fund in which he trades a range of investments including equities and currencies to guard against big swings in financial markets.
Ironically, while Dahl prefers to keep discussion of his personal history with Milken and Drexel Burnham at arm's length, he still works his old Drexel connections and still openly embraces the core of Drexel's investment philosophy: "The concept of providing capital to non-investment grade companies has been validated," Dahl says. "That's where we see the opportunity for our company: providing capital to non-investment grade companies that have good management, a good business plan and an innovative product."
Dahl's biggest play since leaving Drexel actually began in 1990, before he moved to Jacksonville. He began considering St. Joe Paper Co. and Florida East Coast Industries, the railroad and real estate company in which St. Joe owns a majority share, as possible investments. The Jacksonville-based companies were a collection of disjointed operations involved in paper making, telecommunications, sugar production and railroads. St. Joe, as the state's largest private landholder, is rich in holdings. To Dahl, St. Joe's share price did not reflect the underlying value of the assets. "St. Joe had a very sleepy management team that was not driven to create value for the shareholders," he says.
Dahl began buying stock and before long, St. Joe was his largest holding. And before long, Dahl began showing up at the company's annual shareholder meetings, voicing his opposition to management. "I met with them here at this table," Dahl says, sitting at the conference table in his ninth-floor office looking out on downtown Jacksonville and the St. Johns River. "I said, ?Guys, respectfully, I own more stock than all of the employees of St. Joe and Florida East Coast put together, and I feel like I'm entitled to have an opinion.'"
Dahl went as far as to get St. Joe to interview Al Dunlap, now chief executive of Sunbeam, for the CEO post, but Dunlap wasn't hired. Eventually, a lawsuit filed by former St. Joe Chairman Jacob Belin and pressure from outsiders such as Dahl forced the company to bring in new management. Since St. Joe hired former Disney executive Peter Rummell early last year as chairman and chief executive officer, St. Joe's share price has soared 55%, and Florida East Coast's by almost 30%. "I'm a fan now," Dahl says.
Other companies have been initially suspicious of Dahl, only to be won over by his salesmanship and commitment. When Dahl began acquiring larger and larger chunks of stock in a small Minnesota tractor manufacturer called ASV Inc. in the spring of 1996, Gary Lemke, the company's president, fretted about whether the former Drexel investment banker might try to take over his company. Not to worry, Dahl assured the company, he was only interested in ASV as an investment. Dahl is now the company's largest shareholder, with 12% of the stock, a director and ASV's biggest booster. Sales have risen almost sixfold to more than $24 million in the past three years; the company's share price has risen from around $8 when Dahl began buying in to as high as $33 last fall. ASV makes a small, rubber-treaded tractor that because of its special weight displacement doesn't leave behind track marks. Dahl even bought two of the machines to work his plantation north of Tallahassee. "We like the guy," Lemke says of Dahl. "He's out hustling business for the company."
A statewide presence
Lately, Dahl's firm has been investing in newer Florida companies. Dahl paid $500,000 for a 10% stake in Hiway Technologies, a 3-year-old Internet service company based in Boca Raton that is expected to go public this summer. Hiway, which provides Web hosting services to businesses that want to set up a Web site, is a rarity among Internet-related firms that have gone public in the past two years: It's profitable, says Cahoon, who serves as chairman of Hiway. Dahl has invested another half-million dollars in Miami-based AnswerThink, a promising technology consulting firm that is made up of former KPMG Peat Marwick partners and also is expected to go public this year.
One recent investment struck an ironic note given Dahl's Drexel connection: One of Drexel's biggest beneficiaries was Ted Turner, who built his communications empire with money that Drexel raised. In January, Dahl helped find financing for a Ponte Vedra high-tech firm called Zekko Corp., whose principal is Turner's son Teddy.
Not all of Dahl's ventures have been winners. A pricey gated residential community called Heron Pointe in Naples has sold just about half of its 47 lots in the eight years since the development opened. "It was an experiment," says Dahl's brother Bill. And in Quincy, an investment in a synthetic ornamental rock maker called Quinstone has bedeviled Dahl and his partners. They've installed a new management team, but haven't given up on the company just yet.
Dahl also left tens of millions of dollars on the table when he bailed out early from AccuStaff Inc., the fast-growing Jacksonville-based personnel leasing company. Dahl's firm invested $1.5 million in AccuStaff convertible debt just before the company went public in 1993. After converting the debt to equity, Dahl sold off most of the shares, making a tidy profit but missing out on the big runup in the stock price. "Bad trade," Dahl says. "Screwed up. But I'd like to have 50 more bad trades just like that one."
Perhaps anticipating a chilly reception when he moved to Jacksonville, Dahl has taken pains to create a comfort zone for himself and his family. For one, he brought his three siblings into his firm: Brother Bill, also an FSU MBA, is chief financial officer of James Dahl & Co. Sister Trina Miller works in the office. Another brother, Mike, manages the company's plantation properties near Tallahassee. Earlier this year, Dahl also hired Peter Collins, another FSU MBA graduate and a former investment manager at Florida's $65 billion state pension fund.
Dahl also reached out to his adopted city. He bought and renovated the old Swisher estate on the St. Johns River. He's given generously to local charities such as Wolfson Children's Hospital and the Otis Smith Foundation. And when the city was trying to win a National Football League franchise, Dahl assisted by pledging to buy 200 club seats.
"He wants to be accepted"
Still, the taint of the Drexel years seems to persist. Ringhaver says that while younger members of the business community "are more open-minded and respect (Dahl's) ability,'' the city's old lions are more cautious. "I wouldn't say they've shunned him, but they have kept him at arm's length," Ringhaver says. It's no surprise that one of Dahl's biggest boosters is Herbert Peyton, a self-professed outsider who recently penned an autobiography called "Newboy," in which the crafty businessman tells how he bested the city's old guard in bidding for a prized collection of Jacksonville-area properties that included the prestigious Ponte Vedra Inn & Club. "Jim's a shrewd investor," Peyton says.
For his part, Dahl professes indifference to not being invited onto the boards and clubs that constitute the city's inner business circle. He's too busy anyway, he says during an interview in his office, piled high with financial reports and aerial photographs. "I'm research-oriented and I can't stand meetings. I like to be able to put on any hat I want in the morning. If I want to put on blue jeans and bury myself in 10-Q's in my office for 10 hours, that's what I want to do."
Perhaps. But Ringhaver thinks Dahl is looking for something more. "He wants to be a community player. He wants to be accepted. But he won't go around kissing anyone's rear end."
On a Wednesday night at a pickup basketball game in the gym at Episcopal High School in Jacksonville, Dahl's vaunted intensity is clearly in evidence. He bounds up the basketball court, gaze fixed, arms thrust upward, begging for the ball. On this night, Dahl wins three straight games - and for the moment, the people that matter in his adopted town are all on his team.