(FORTUNE Magazine) – DEALMAKER extraordinaire Michael Dingman stunned even the most jaded Wall Streeters last spring when he raised a thumping $1.2 billion for a ragtag group of companies in the largest U.S. initial public offering ever. The money went to the Henley Group, a money-losing bunch of businesses that Allied-Signal didn't want and spun off to its shareholders in May. It wouldn't seem anyone's dream investment. Yet so formidable is Dingman's reputation on Wall Street that investors rushed to fill his billion-dollar-war chest, even though he will use most of it not to build up Henley but to make acquisitions -- and he'll decide on those later, thank you. Investors like his style. The 6-foot-4, balding Dingman, 55, exudes confidence and argues emphatically on any topic from sports to corporate takeovers. He can be blunt at one moment and easygoing at another. He hates bureaucracy and has few qualms about cutting staff and costs to the bone. Dingman's independence goes back to his college days, when he married against the will of his father, a former vice chairman of AT&T. Dad cut off all funds, and Dingman quit the University of Maryland to work as a salesman . for a New Jersey flagpole company. In 1962 he joined Drexel Burnham, learned the ins and outs of Wall Street, and left six years later to co-found a New York investment firm called Equity Corp. Here Dingman developed his core business philosophy: Buy companies at a discount in depressed markets, spruce them up, wait for the market to bounce back, then sell or spin them off at a handsome profit. In 1971 he put together Wheelabrator-Frye, a conglomerate that he merged 12 years later with Signal. Two years after that he helped engineer the corporate marriage between Signal and Allied. An investor who bought Wheelabrator in 1971 and hung on to it would have increased his money sixfold over the past 15 years, while Standard & Poor's 500-stock index only about doubled. Investors are betting that Dingman can do it again with Henley. He recently moved Henley's headquarters from New York to La Jolla, California, where he lives in a new $5-million seaside house with his second wife, Betsy, and their sons, David and James. (Dingman has three other children, all grown, by his first wife, Jean.) He also has a new ski house in Aspen, Colorado. Dingman sometimes races around La Jolla on a Honda 750 motorcycle. For quieter diversion, he likes to restore classic cars. His latest projects: a 1965 Porsche Cabriolet and a 1969 Jaguar E-type roadster. Most of Dingman's legendary energy goes into reviving the Henley Group. The companies that now make it up lost $24.7 million on sales of $3.3 billion in 1985. Henley has three principal businesses, all of them now depressed: industrial chemicals, engineering and construction, and health care supplies. In his first major move as C.E.O. last June, Dingman merged his Fisher Scientific Group with a smaller company in the health field, streamlined management and costs, and announced plans to distribute a 20% stake in the new company to Henley stockholders. Dingman makes decisions quickly and expects his staff to carry them out immediately. He inspires loyalty by letting his executives take on lots of responsibility and by not punishing them if they take a big risk and fail. Several have worked with him for more than 15 years. Dingman offers strong incentives for success. He pays high salaries, and he recently set up a novel program through which he and his 19 top executives are putting their own money together to buy 5% of Henley stock. He hopes the move will inspire his managers to act more like entrepreneurs. Dingman himself does not lack incentives to make Henley pay. He owns 1,501,254 shares in the company, most of which he got as part of the executive stock purchase program. Henley was recently selling for $23.25 a share, making his holding worth about $35 million. The original offering price was $21; in December, to try to move the stock further upward, the directors authorized a buyback of up to ten million shares. ''It takes nine months to make a baby and 21 years to make an adult,'' Dingman says. ''You're not going to see results overnight.'' What investors do see is a high-risk bet on one of Wall Street's savviest players.