Distant Force

Distant Force by George Roberts and Robert McVicker

For over thirty years, Teledyne (TDY) was run by Henry Singleton. This book is a record of those years.

Why do people study TDY? In the 1960s, Singleton created a meme-stock company: TDY was an technology company in a time when any stock that ended in -tron or -onics was in a bubble. Since the market was paying a higher Price/Earnings multiple for tech stocks, Singleton bought other profitable and private tech companies using only TDY shares. As long as the P/E multiple paid was less than the market accorded TDY, the market would see TDY as a growth company even if none of the underlying companies were actually growing.

Towards the end of the 1960s, Singleton (a) stopped buying tech, and (b) started buying financial companies, and (c) used the cash flow to zero TDY's debt. As the market continued to reel in the 1970s, he bought non-control amounts of good companies via public markets, as that was cheaper than buying private companies. This included buying back TDY shares, so that its Earnings/Share skyrocketed.

Finally, in the 1980s and 1990s, he spun off companies when the market was willing to accord spin-offs a higher multiple than TDY since conglomerates had gone out of favor.

This book is amazingly frustrating and difficult to read because it all at a remove. We never get Singleton's thoughts on anything because he was the sole architect of any public markets interactions, and he never shared those views with other executives, other than to announce that TDY would now be buying X instead of Y.

Which makes this book like an un-commented chess game played by a strong player. You just end up with more than a few moves where all you have is "!?!".