Teledyne

Founders · Aug 31

How Henry Singleton Worked

Under Singleton it returned 20.4% a year for almost 30 years, buying about 130 companies from 1961 to 1969 with pricey stock. It then retired about 90% of its shares in eight tenders from 1972 to 1984, ran 130 profit centers on a cash-based return, and employed over 40,000 people with fewer than 50 at headquarters.

Tips

• Henry Singleton bought back over 90% of Teledyne's shares when they were cheap▶ 10:27Teledyne shareholders earned a 42% compound annual return across the tender offers.
• Henry Singleton treated capital allocation as the CEO's most important job and spent his time there▶ 1:45Teledyne returned 20.4% a year for almost 30 years, and Buffett said Singleton had the best operating and capital deployment record in American business.
• Henry Singleton ran Teledyne on cash flow, with a metric averaging cash and profit▶ 38:38In 1979 Teledyne had about 130 profit centers and only one lost money.
• Henry Singleton ran Teledyne with fewer than 50 people at headquarters and over 40,000 employees▶ 32:54The most successful conglomerate of its era was the least conglomerate-like in operations.
• Henry Singleton stopped acquiring companies in 1969 once his stock was no longer pricey currency▶ 35:18He paused after about 150 acquisitions to consolidate what he had.
• Henry Singleton bought stakes in public companies instead of overpriced whole companies▶ 34:51Munger said that like Buffett and himself, Singleton was comfortable with concentration and bought only a few things he understood well.
• Henry Singleton followed his own thinking instead of the Wall Street crowd▶ 15:15Buffett's Berkshire later used many of the same tenets Singleton had applied first at Teledyne.
• Henry Singleton kept Teledyne's earnings lumpy to maximize cash flow▶ 42:00From 1970 the company produced remarkably consistent profitability across very different market conditions.
• Henry Singleton refused detailed plans and steered Teledyne day by day▶ 14:30His strategy shifted by decade: acquisitions in the 1960s, consolidation and buybacks in the 1970s.
• Henry Singleton bet on people and kept acquired managers running their own businesses▶ 28:33Most acquired managers stayed on, many of whom had built their companies over 20 or 30 years.
• Henry Singleton left Litton and founded Teledyne on a semiconductor conviction his boss rejected▶ 24:12Teledyne became public in 1961 and grew into one of the most successful companies ever built.
• Henry Singleton bought profitable niche leaders and avoided turnarounds▶ 7:20He bought 90 more companies during 1966 to 1969 alone.
• Henry Singleton wanted Teledyne to branch like a plant so no business mattered too much▶ 26:30Teledyne ran about 130 profit centers, and by 1979 only one lost money.
• Henry Singleton held big stakes in Fortune 500 companies but never sought control▶ 37:47A Curtiss-Wright spokesman said Singleton stayed out of their affairs even as largest shareholder.
• Henry Singleton wanted managers who knew their business numbers cold▶ 32:30
• Henry Singleton told his managers their real competitors were other large US corporations, not each other▶ 29:05
• Henry Singleton practiced frugality and paid every bill himself to learn the business▶ 43:00He never sold a piece of real estate in his life and was about the third largest landowner in the US when he died.