A trip back through time to read an article about Henry Singleton and his master capital allocation skills. Can you imagine how much more value per share would be created for shareholders is every CEO studied Singleton?
Here is the 1973 Forbes article, from a time that was likely as frightening for equity investors as today is:
http://www.scribd.com/doc/18173672/fs1979
Here is a second article that details how in the 1960s Singleton used Teledyne shares to make acquisitions and then in the 1970s when it was cheap he bought it back by the bucket load:
Something went haywire with American capitalism in the 1990”²s, and we think we know what it was: There weren’t enough Henry E. Singletons to go around. In truth, there was only one Henry Singleton, and he died in 1999. He could read a book a day and play chess blindfolded. He made pioneering contributions to the development of inertial navigation systems. He habitually bought low and sold high. The study of such a protean thinker and doer is always worthwhile. Especially is it valuable today, a time when the phrase “great capitalist” has almost become an oxymoron.
Singleton, longtime chief executive of Teledyne Inc., was one of the greatest of modern American capitalists. Warren Buffett, quoted in John Train’s The Money Masters , virtually crowned him king. “Buffett,” Train reported, “considers that Henry Singleton of Teledyne has the best operating and capital deployment record in American business.”
A recent conversation with Leon Cooperman, the former Goldman Sachs partner turned portfolio manager, was the genesis of this essay. It happened in this fashion: Mr. Cooperman was flaying a certain corporate management for having repurchased its shares at a high price, only to reissue new shares at a low price. He said that this was exactly the kind of thing that Singleton never did, and he lamented how little is known today of Singleton’s achievements as a capital deployer, value appraiser and P/E-multiple arbitrageur. Then he reached in his file and produced a reprint of a critical Business Week cover story on Teledyne. Among the alleged missteps for which Singleton was attacked was his heavy purchase of common stocks. The cover date was May 31, 1982, 10 weeks before the blastoff of the intergalactic bull market.
The wonder of Singleton’s life and works is the subject under consideration-admittedly a biographical subject, as opposed to a market-moving one. We chose it because Singleton’s genius encompassed the ability to make lemonade out of lemons, a skill especially valuable now that lemons are so thick underfoot.
Singleton was born in 1916 on a small farm in Haslet, Tex. He began his college education at the U.S. Naval Academy but finished it at M.I.T., earning three degrees in electrical engineering: bachelor’s and master’s degrees in 1940, and a doctorate in 1950. In 1939, he won the William Lowell Putnam Intercollegiate Mathematics Competition Award. In World War II, he served in the Office of Strategic Services. At Litton Industries, in the early 1950”²s, he began his fast climb up the corporate ladder: By 1957, he was a divisional director of engineering. In 1960, with George Kozmetsky, he founded Teledyne.
Anyone who was not reading The Wall Street Journal in the 1960”²s and 1970”²s missed the most instructive phase of Singleton’s career. When the Teledyne share price was flying, as it was in the 1960”²s, the master used it as a currency with which to make acquisitions. He made about 130. Many managements have performed this trick; Singleton, however, had another: When the cycle turned and Teledyne shares were sinking, he repurchased them. Between 1972 and 1984, he tendered eight times, reducing the share count (from high to low) by some 90 percent. Many managements have subsequently performed the share-repurchase trick, too, but few have matched the Singleton record, either in terms of market timing or fair play. Singleton repurchased stock when the price was down, not when it was up (in the 1990”²s, such icons as G.E., I.B.M., AOL Time Warner, Cendant and, of course, Tyco paid up-and up). He took no options awards, according to Mr. Cooperman, and he sold not one of his own shares. Most pertinently to the current discussion of “corporate governance,” he didn’t sell when the company was buying (another popular form of managerial self-enrichment in the 1990”²s).
Link to the full article: http://www.observer.com/2003/04/the-brain-behind-teledyne-a-great-american-capitalist/
Here is the 1973 Forbes article, from a time that was likely as frightening for equity investors as today is:
http://www.scribd.com/doc/18173672/fs1979
Here is a second article that details how in the 1960s Singleton used Teledyne shares to make acquisitions and then in the 1970s when it was cheap he bought it back by the bucket load:
Something went haywire with American capitalism in the 1990”²s, and we think we know what it was: There weren’t enough Henry E. Singletons to go around. In truth, there was only one Henry Singleton, and he died in 1999. He could read a book a day and play chess blindfolded. He made pioneering contributions to the development of inertial navigation systems. He habitually bought low and sold high. The study of such a protean thinker and doer is always worthwhile. Especially is it valuable today, a time when the phrase “great capitalist” has almost become an oxymoron.
Singleton, longtime chief executive of Teledyne Inc., was one of the greatest of modern American capitalists. Warren Buffett, quoted in John Train’s The Money Masters , virtually crowned him king. “Buffett,” Train reported, “considers that Henry Singleton of Teledyne has the best operating and capital deployment record in American business.”
A recent conversation with Leon Cooperman, the former Goldman Sachs partner turned portfolio manager, was the genesis of this essay. It happened in this fashion: Mr. Cooperman was flaying a certain corporate management for having repurchased its shares at a high price, only to reissue new shares at a low price. He said that this was exactly the kind of thing that Singleton never did, and he lamented how little is known today of Singleton’s achievements as a capital deployer, value appraiser and P/E-multiple arbitrageur. Then he reached in his file and produced a reprint of a critical Business Week cover story on Teledyne. Among the alleged missteps for which Singleton was attacked was his heavy purchase of common stocks. The cover date was May 31, 1982, 10 weeks before the blastoff of the intergalactic bull market.
The wonder of Singleton’s life and works is the subject under consideration-admittedly a biographical subject, as opposed to a market-moving one. We chose it because Singleton’s genius encompassed the ability to make lemonade out of lemons, a skill especially valuable now that lemons are so thick underfoot.
Singleton was born in 1916 on a small farm in Haslet, Tex. He began his college education at the U.S. Naval Academy but finished it at M.I.T., earning three degrees in electrical engineering: bachelor’s and master’s degrees in 1940, and a doctorate in 1950. In 1939, he won the William Lowell Putnam Intercollegiate Mathematics Competition Award. In World War II, he served in the Office of Strategic Services. At Litton Industries, in the early 1950”²s, he began his fast climb up the corporate ladder: By 1957, he was a divisional director of engineering. In 1960, with George Kozmetsky, he founded Teledyne.
Anyone who was not reading The Wall Street Journal in the 1960”²s and 1970”²s missed the most instructive phase of Singleton’s career. When the Teledyne share price was flying, as it was in the 1960”²s, the master used it as a currency with which to make acquisitions. He made about 130. Many managements have performed this trick; Singleton, however, had another: When the cycle turned and Teledyne shares were sinking, he repurchased them. Between 1972 and 1984, he tendered eight times, reducing the share count (from high to low) by some 90 percent. Many managements have subsequently performed the share-repurchase trick, too, but few have matched the Singleton record, either in terms of market timing or fair play. Singleton repurchased stock when the price was down, not when it was up (in the 1990”²s, such icons as G.E., I.B.M., AOL Time Warner, Cendant and, of course, Tyco paid up-and up). He took no options awards, according to Mr. Cooperman, and he sold not one of his own shares. Most pertinently to the current discussion of “corporate governance,” he didn’t sell when the company was buying (another popular form of managerial self-enrichment in the 1990”²s).
Link to the full article: http://www.observer.com/2003/04/the-brain-behind-teledyne-a-great-american-capitalist/
