Henry Singleton: Crafting the Teledyne Empire

In corporate America, few stories are as gripping as that of Henry Singleton, a maverick whose genius turned Teledyne into an industrial empire. Singleton’s moves — from fearless acquisitions to unprecedented stock buybacks — were bold and unorthodox. His playbook, frequently different from general business trends, has become a blueprint for value creation.

Born on November 27, 1916, Henry Singleton’s journey from a small ranch near Haslet, Texas, to becoming a renowned figure in business and engineering is a remarkable story. His formative years in the rural setting likely instilled a practical approach to problem-solving in him. His first venture into higher education was at North Texas Agricultural College, where he began developing his foundation in engineering and science.

However, Singleton’s academic path took a turn when he was appointed to the U.S. Naval Academy. Known for its demanding training, the Academy was a significant step up in his formative education. Unfortunately, due to a medical issue, Singleton had to leave the Academy, which could have been a major setback. But, displaying resilience, he redirected his ambitions to the Massachusetts Institute of Technology (MIT).

At MIT, a leading institute in engineering and technology education, Singleton found an environment where his talents could flourish. He immersed himself in the study of electrical engineering, a field pivotal to the rapidly growing technology industry. Singleton’s dedication and talent in this challenging field led him to earn a doctorate, proof of his deep understanding of complex engineering principles and his innovative thinking.

This rich blend of practical knowledge from his early years, combined with the academic excellence achieved at MIT, was crucial in shaping Singleton’s career. It provided a solid foundation for his future endeavors in business and technology, paving the way for his success as a business leader and an innovator in his field.

After graduating from MIT in 1940, Singleton took a Civil Service position as an electrical engineer at the Naval Ordnance Laboratory in Washington, D.C. His work there involved analyzing a process called “degaussing,” which protected cargo ships from German-laid magnetic naval mines during World War 2, by reducing the magnetic field around the steel hulls of the vessels.

Singleton’s talents were further recognized when he was invited to join the Anti-Submarine Warfare Operations Research Group (ASWORG) in 1942, organized by MIT professor Philip M. Morse. During World War 2, Singleton’s scientific expertise was in high demand, leading him to join the Office of Strategic Services (OSS) in 1944 – the forerunner of what would become the Central Intelligence Agency (CIA).

Post-war, Singleton had a brief assignment as a research associate at General Electric. He was then recruited by Simon Ramo, on behalf of Howard Hughes, to join a team at Hughes Aircraft in Los Angeles. This team was tasked with applying the latest digital technologies to the electronic control system of the F-102 fighter aircraft. Through various other roles at Hughes Aircraft, North America Aviation, and Litton Industries, Singleton continued to build on his expertise in technology and robotic applications.

By 1957, Singleton had become director of engineering of the Electronics Equipment Division, and in 1958, he was appointed vice-president and general manager of the division. He went on earning several patents for his work in gyro-stabilized and precision platforms, and accelerometers​.

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Singleton’s early professional experiences were vital in shaping his approach to business and technology. His transition from a highly skilled engineer to an innovative business leader was marked by his founding of Teledyne in 1960, alongside George Kozmetsky and Arthur Rock. Teledyne was dedicated to applying digital technology across various fields, including aerospace, mineral exploration, medical technology, and manufacturing. Under his leadership, the company evolved into one of America’s most successful conglomerates.

His tenure at Teledyne was mainly marked by a three-phase strategy: rapid expansion through acquisitions, aggressive share buybacks, and eventually spinning out subsidiaries.

Between 1960 and 1969, Singleton acquired 130 companies in a range of industries, employing a disciplined approach that focused on acquiring profitable, growing companies at no more than 12 times their earnings. Notably, during Teledyne’s peak, it had a lean corporate headquarters with fewer than 50 people, contrasting sharply with its total workforce of over 40,000.

In the late 1960s, when Teledyne’s price/earnings (P/E) ratio began to fall, Singleton cleverly shifted his strategy from acquisitions to share repurchases. This move was unconventional at the time, as buybacks were often seen as a last resort for companies lacking investment opportunities. However, Singleton’s foresight proved to be revolutionary. Over 12 years, he bought back a staggering 90% of Teledyne’s shares, boosting the company’s earnings per share 40-fold, solidifying his reputation as a pioneer in using buybacks as a strategic financial tool.

Henry Singleton’s business acumen and innovative management strategies gained recognition in William Thorndike’s book “The Outsiders” and John Train’s “The Money Masters.” In “The Outsiders,” Thorndike profiles exceptional CEOs, and Singleton’s successful leadership of Teledyne is highlighted as a prime example.

Similarly, in “The Money Masters,” Train examines the strategies of leading investors and business figures, with Singleton’s unique approach to acquisitions, share buybacks, and overall corporate strategy being featured. These inclusions underscore Singleton’s status as a model of effective leadership and financial acumen.

Singleton’s mastery in business management and capital allocation was highly regarded by his peers, including Warren Buffett. Buffett has been quoted as saying that Singleton had the best operating and capital deployment record in American business. He’s even suggested that if you were to take the top 100 business school graduates, no one would be able to surpass Singleton’s achievements.

Buffett's admiration for Singleton was not just for his business achievements but also for his unconventional approach, which starkly contrasted with the typical business school models. Buffett has criticized business schools for not studying figures like Singleton, who demonstrated that success in business could be achieved through unconventional paths and strategies. Instead, Buffett has noted that business schools often promote a standard model of executives, which he likens to a "McKinsey & Company cookie cutter" approach.

In summary, Henry Singleton’s legacy in the corporate world is defined by his innovative strategies and exceptional intellect. From his early days as an electrical engineer to his tenure as the CEO of Teledyne, Singleton demonstrated a mastery of both technical expertise and strategic business acumen. His approach to acquisitions, share repurchases, and overall corporate management remains a benchmark for business leaders and investors worldwide.