In this interview with Forbes, Leon Cooperman discusses what he learned for Henry Singleton. Here’s an excerpt from the interview:
Cooperman: I learned a lot from studying Henry Singleton. He graduated number one in his class at the Naval Academy and got a Ph.D. in electrical engineering at MIT. He was a senior executive at Litton Industries, and in 1958 Tex Norton, the founder of Litton, promoted Roy Ash into the position of CEO and Singleton left to start Teledyne. From 1958 to 1968, he did 130 acquisitions doing a rollup strategy.
He would take his high-multiple conglomerate stock and buy lower-multiple businesses. In 1968, I had lunch with him, and he told me the acquisition game for Teledyne is over. It makes no sense to take undervalued public market stock and pay a private-market value to buy businesses. We’re going to spend our time studying the environment and see what makes sense.
At that time, Harold Geneen at ITT and George Scharffenberger at City Investing kept on pumping out stock to do deals, and they were giving out undervalued stock and paying full value to buy businesses. Singleton understood the fragility of that. Beginning in 1972 and ending in 1984, he had eight self-tender offers and retired 90% of his stock.
He acquired intelligently, he retired his stock brilliantly and in the 1972-73 bear market, when most money managers were selling stocks to buy bonds, he told me that in his view, the high-risk asset in the economy was bonds, not stocks. He went out and bought 28% of Litton Industries, where he was passed over for presidency, 30% of Broadway Glass and 20% of Reiko Chemical—very large, concentrated equity positions that made a fortune for his shareholders—and interest rates went up and he avoided capital losses. Warren Buffett said he was truly brilliant and one of a kind.
You can read the entire interview here:
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