Monthly Archives: July 2008

Sir John Templeton, one of the great investors of all time, has died at age 95. He was a great influence on me as a young kid trying to learn about investing. Not only was he a great investor, he was a great human being. Below is a link to an old Wall Street Week interview and a Wall Street Journal obituary.

Wall Street Week with Louis Ruykeyser with Sir John Templeton

Wall Street Journal
Fund Pioneer Templeton Dies
By JONATHAN BURTON
July 9, 2008; Page C17

SAN FRANCISCO – Sir John Templeton, the legendary mutual-fund manager who was a pioneer of international investing and later committed much of his fortune to scientific and religious causes, died Tuesday. He was 95.

Over the course of a Wall Street career that began in 1937 and spanned more than five decades, Sir John earned a reputation for prescient, bargain-minded stock selection that consistently rewarded shareholders in his Templeton Funds family.

In 1999, Money Magazine called Sir John “arguably the greatest global stock picker of the century.” A $10,000 investment in the storied Templeton Growth Fund in 1954 would have grown to $2 million by 1992, when Sir John sold his company to Franklin Resources, the San Mateo, Calif.-based fund giant, for $913 million. That translates to an annualized 14.5% return.

Charles Johnson, Franklin’s chairman, said in a written statement, “Even at our first in-person meeting in 1992, when we discussed the potential merger between our companies, I quickly realized that John was a man of principle, determination, intelligence and wisdom. His brilliance as an investor was second to none.”

Sir John, who lived in the Bahamas and was a naturalized British citizen, died at Doctors Hospital in Nassau. The cause was pneumonia, according to a statement that the John Templeton Foundation, his charitable organization, posted on its Web site.

Uncommon Investor

Early in his investing career, Sir John showed that he was willing to take roads less traveled. He extolled the wisdom of buying superior stocks at what he called points of “maximum pessimism” in order to take advantage of temporarily low prices. He applied that strategy to countries, industries and companies, displaying a rare ability among investment professionals to avoid following the crowd.

“He was one of a kind,” said Martin Flanagan, chief executive of mutual-fund company Invesco Ltd., in a telephone interview. Mr. Flanagan was director, executive vice president and chief operating officer of Templeton, Galbraith & Hansberger, Ltd. before its acquisition by Franklin.

“He was probably one of the biggest free thinkers in our industry,” added Flanagan, who joined Franklin as chief financial officer after the acquisition and in 2004 became its president and co-chief executive.

“He led very quietly through deep, thoughtful analysis and engaged in very broad conversation and really challenged perspectives that are not common,” Flanagan said of Templeton. “He would be asking the question or putting you in the direction that few would ever think of.”

It was Sir John’s embrace of international markets at a time when most Americans wouldn’t consider such investments that truly set him apart. Templeton Growth, introduced in 1954, was among the first mutual funds to invest in companies based outside of the U.S. Siblings Templeton World Fund and Templeton Developing Markets Fund, with its globetrotting manager Mark Mobius, also earned accolades.

“Remain flexible and open-minded about types of investment,” Sir John advised investors in a 1993 article, “16 Rules for Investment Success.” Among his other aphorisms: “Invest — don’t trade or speculate”; “Diversify. In stocks and bonds, as in much else, there is safety in numbers,” and “Do not be fearful or negative too often.”

Religious Devotion

John Marks Templeton was born Nov. 29, 1912 in the small town of Winchester, Tenn. He graduated from Yale University in 1934 near the top of his class and was named a Rhodes Scholar at Oxford. After completing his studies at Oxford he set off on a world tour that exposed him to many countries and cultures before returning to the U.S. and a job on Wall Street.

When World War II began in 1939, Sir John put that global experience into practice. He borrowed money to buy 100 shares each of 104 companies selling at $1 a share or less, including 34 companies that were in bankruptcy, according to a posting on the Templeton Foundation’s Web site. Sir John held each stock for an average of four years, and only four turned out to be worthless.

Mr. Flanagan, the Invesco executive, recalled that Sir John exhibited a similar conviction during the 1987 stock market crash. It was Sir John’s practice to leave the office just before noon to exercise, take lunch and study. When he returned, an anxious Mr. Flanagan told Sir John that the market was falling apart. Sir John took it all in stride.

“The bad news,” Mr. Flanagan remembers him saying, “is we’re in a bear market. The good news is it’s almost over. Let’s find stocks to buy.”

Added Mr. Flanagan: “Today you could see that was an obvious thing to do. At the time it was not obvious at all. To have that kind of conviction and leadership is absolutely unique.”

In his life, Sir John, a devout Presbyterian, forged a union between his progressive investment philosophy and his equally open-minded religious thought.

“I am still an enthusiastic Christian,” Sir John once said. “But why shouldn’t I try to learn more? Why shouldn’t I go to Hindu services? Why shouldn’t I go to Muslim services? If you are not egotistical, you will welcome the opportunity to learn more.” In 1972, he established the Templeton Prize, the largest annual award given to an individual. Mother Teresa received the first award in 1973. The prize, which in 2009 will be valued at 1 million pounds, or about $2 million, recognizes achievement in work that relates to science, philosophy and spirituality. Its monetary value is always more than the Nobel Prizes — Sir John’s way of demonstrating that spiritual work should not be discounted.

Sir John was knighted by Queen Elizabeth II in 1987 for his philanthropic achievements. That same year he created the foundation, which today has an endowment of about $1.5 billion and awards around $70 million in annual grants. The foundation supports research into fields of science and theology, in keeping with Sir John’s religious values and beliefs.