His rule for transactions was a double-digit after-tax return over ten years without leverage. Singleton believed that there was “a time to conglomerate and a time to de-conglomerate.” He successfully spun off Argonaut and Uniturn at a time when the later company accounted for a majority of Teledyne’s value. In all cases, this led the outsider CEOs to focus on cash flow and forgo the blind pursuit of the Wall Street holy grail of reported earnings. Murphy used leverage to fund acquisitions. One chapter is on director Tom Murphy, who Buffett says is "overall the best business manager I've ever met." Graham’s uncharacteristic buying spree during the recession of the early 1990s was also telling. 2. They had familiarity with other companies and industries and disciplines, and this ranginess translated into new perspectives, which in turn helped them to develop new approaches that eventually translated into exceptional results. During Warren Buffett’s tenure of 40 years, Berkshire’s returns outperformed the S&P by over a hundredfold. Learn how their approach generated exce… Value Investing emphasized buying companies that were trading at significant discounts to net working capital. The outsider CEOs, like Stonecipher and Tillerson, tended to dance when everyone else was on the sidelines and to cling shyly to the periphery when the music was loudest. — Winston Churchill. As he once said, “Computers require an immense amount of detail… I’m a mathematician, not a programmer. Give the CEO the space to succeed. I. Cash flow, not reported earnings, is what determines long-term value. EPUB The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success By William N. Thorndike PDF Download ISBN novel zip, rar. He therefore acquired 130 companies in 9 years and issued stock to raise cheap capital. Mason Hawkins, Chairman and CEO, Southeastern Asset Management-- "The Outsiders is a must-read for leaders--and aspiring leaders--striving to become exceptional CEOs, and for investors interested in partnering with exceptional stewards of corporate capital." Along with this shift in investment criteria came an important shift to longer holding periods, which allowed for long-term pretax compounding of investment values. Title. For a company of 40,000 people, Teledyne’s headquarters had less than 50 people with no human resources, business development, or investor relations departments. It was an environment that selected for and promoted independent, entrepreneurial managers. The company’s whole acquisition ethos was to wait for just the right deal.”, As her son Donald says Today, “The deals not done were very important.” Another large newspaper would have been a boat anchor around our necks today.”. As Munger says, “No one has ever bought in shares as aggressively.”. Very similar to Good to Great. 3. The Outsiders is a great book that looks at eight CEO’s who produced above average returns for shareholders over the long term. This led him to invest in consumer brands and media properties — businesses with “franchises,” dominant market positions, or brand names. They bought their stock when it was cheap and leveraged it to raise cheap capital when it was expensive. They did not seek (or usually attract) the spotlight. As her son Donald has said, “Figuring out this relatively unknown guy was a genius was one of the less celebrated, best moves she ever made.”. With an exceptionally strong balance sheet, she became an active buyer at a time when her over leveraged peers were forced to the sidelines. This cash flow was used to fund the acquisition of new companies. Most of this was returned to shareholders. Almost all of them were first time CEOs. PDF The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William N. Thorndike EPUB Download Ready for reading and downloading. Anything in brackets or emboldened is me. Most CEOs are hedgehogs — they grow up in an industry and by the time they are tapped for the top role, have come to know it thoroughly. Anders agreed to sell the business on the spot, even though it shrank the company to half its former size and left it with only its tank and submarine units. With no prior broadcasting experience themselves before joining Capital Cities, Murphy and Burke shared a clear preference for intelligence, ability, and drive over direct industry experience. Free delivery on qualified orders. All three CEOs were committed to stock buybacks, including Anders’s tender in 1992, where 30% of the stock was repurchased. They were very different from the high-profile CEOs such as Steve Jobs or Sam Walton or Herb Kelleher of Southwest Airlines or Mark Zuckerberg. He was known for his sense of humor and for his honesty and integrity. Berkshire now owned 18% of Capital Cities. [pg 7, Introduction]. For most growth and mid-sized companies, a full-time experienced Chief Marketing Officer is … Teledyne was founded at a time when conglomerates enjoyed high price-to-earnings (P/E) ratios, and the cost of acquisitions was far cheaper. Teledyne spent an incredible $2.5 billion on buybacks. When Bill Anders took over as CEO of General Dynamics, the company was at a historic low. Warren Buffett bought his first share at Berkshire Hathaway for $7. How much will this cost? We performed a back of the envelope LBO model, met again at 4:00 PM and decided to bid $1.4 billion. In 1995, he acquired Bath Iron Works for $400 million. Book recommendation: The Outsiders by William N. Thorndike. You will meet eight individualistic CEOs whose firms' average returns outperformed the S&P 500 by a factor of twenty--in other words, an investment of $10,000 with each of these CEOs, on average, would have been worth over $1.5 million twenty-five years later. “The Outsiders is a must-read for leaders—and aspiring leaders—striving to become exceptional CEOs, and for investors interested in partnering with exceptional stewards of corporate capital.” Walter Kiechel, author, The Lords of Strategy— “If creating wealth for shareholders is the ultimate test of a CEO… During his 29 years, Murphy outperformed the S&P by 16.7 times and his peers by four times. Murphy told me that his auction bids consistently ended up at only 60 to 70 percent of the eventual transaction price. He worked hard to become a preferred buyer by treating employees fairly and running properties that were consistent leaders in their markets. With her board, she subjected all potential transactions to a rigorous, analytical test. Murphy made the largest non-oil and gas transaction in business history when Capital Cities bought the ABC Network for an astounding $3.5 billion in 1986. In fact, Singleton can be seen as a sort of porto-buffett, and there are uncanny similarities between these two virtuoso CEOs, as the following list demonstrates. From 1984 to 1996, Singleton pioneered spinoffs to manage succession and unlock the full value of the company’s insurance operations. It’s common to see Business Schools and Wall Street emphasize an obsessive focus on operational efficiency. Mason Hawkins, Chairman and CEO, Southeastern Asset Management— “ The Outsiders is a must-read for leaders—and aspiring leaders—striving to become exceptional CEOs, and for investors interested in partnering with exceptional stewards of corporate capital.” Walter Kiechel, author, The Lords of Strategy— The CEO Success study shows that outsiders not only are increasingly seen as a viable option in a planned succession but also may perform better. The top five positions accounted for about 60% to 80% of the company’s portfolio and have been held for over 20 years on average. Buffett, however, under Munger’s influence and in a shift from [Benjamin] Graham’s traditional approach, had come to a different conclusion. The defense industry’s excess capacity meant that companies had to either shrink businesses or grow through acquisitions. Although these CEOs have followed an independent and contrarian decision making (which is why they have been called ‘The Outsiders’), the author has found some similarities among them with respect to … The company [Capital Cities Broadcasting] did not simply cut its way to high margins, however. In his first year, Chabraja bought 12 companies. It was a rare combination of both operational excellence and capital allocation. William N. Thorndike’s 2012 book, The Outsiders, about eight of the most successful CEOs in US history, provides a framework for thinking about Tencent’s business. Paul Kagan, a longtime industry analyst, remembered Malone walking away from a sizable Hawaiian transaction that was only $1 million over his target price. This decision had high symbolic value as it signaled to the Pentagon that the company was ready to grow again. He wanted General Dynamics to remain in business only where it was number 1 or number 2 by market position. According to Charlie Munger, Berkshire’s long-term success was due to its ability to “generate funds at 3$ and invest them at 13%”. Berkshire Hathaway plays a major role in the book. His contrarian insight was that companies with low capital needs and the ability to raise prices were actually best positioned to resist inflation’s corrosive effects. They were willing to wait long periods to identify compelling investment or acquisition opportunities. His counsel was simple: “Leadership is analysis.”, You shape your houses and then your houses shape you. As a result, Capital Cities stations always invested heavily in news talent and technology, and remarkably, virtually every one of its stations led in the its local market. PDF The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William N. Thorndike EPUB Download review, torrent download locations. Singleton considered investor relations to be a waste of time, famously avoiding Wall Street and not declaring quarterly earnings guidance. They rarely paid dividends and emphasized cash flows over net revenue. Why leadership is about analysis, not charisma. [pg 19], In the Capital Cities culture, the publishers and station managers had the power and prestige internally, and they almost never heard from New York if they were hitting their numbers. Read full review You may not know all their names, but you will recognize their companies: General Cinema, Ralston Purina, The Washington Post Company, Berkshire … This was the largest transaction in Berkshire’s history. The outsiders also shared some personal characteristics, including frugality, humility, independence, and an analytical, understated approach. Murphy was a highly disciplined buyer who had strict return requirements and did not stretch for acquisitions — once missing a very large newspaper transaction involved three Texas properties over a $5 million difference in price. The best CEOs are not managers, but capital allocators. The author, William N. Thorndike, Jr. especially likes to compare them against Jack Welch who returned 20% over a period that the S&P averaged 14% annual returns. When the Hoak family, owners of a million-subscriber cable business, decided to sell in 1987, Malone was able to strike a deal with them in an hour. All the outsider CEOs had the approach of a long-term investor, not a highly paid employee. [pg 18], The core economic rationale for the deal was Murphy’s conviction that he could improve the margins for ABC’s TV stations from the low thirties up to Capital Cities’ industry-leading levels (50-plus percent). They did not give chamber of commerce speeches, and they did not attend Davos. They were not charismatic visionaries who actively managed operations. The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success - Ebook written by William N. Thorndike. Download for offline reading, highlight, bookmark or take notes while you read The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success. Anders’s turnaround strategy was highly unusual. Anders insisted that the company bid only on projects they had a good chance of winning, and the returns were compelling. After two years of working under Graham, Buffett returned to his hometown Omaha and raised an investing partnership of $105,000. The business world has traditionally divided itself into two basic camps: those who run companies and those who invest in them. Over the next 13 years, he beat the S&P every year without employing leverage. Humble, unassuming, and often frugal, these outsiders” shunned Wall Street and the press, and shied away from the hottest new management trends. [Singleton] did not buy indiscriminately, avoiding turnaround situations, and focusing instead on profitable, growing companies with leading market positions, often in niche markets. In the three years Anders led the company, it generated a remarkable $5 billion in cash. They believed that the best defense against the revenue lumpiness inherent in advertising-supported businesses was a constant vigilance on costs, which became deeply embedded in the company’s culture. Buffett’s story best exemplifies the idea of the CEO as an investor. Isaiah Berlin, in a famous essay about Leo Tolstoy, introduced the instructive contrast between the “fox,” who knows many things, and the “hedgehog,” who knows one thing but knows it very well. These geniuses are the Isaac Newtons of business, struck apple-like by enormously powerful ideas that they proceed to execute with maniacal focus and determination. Over 17 years from Anders’s tenure, the company generated a phenomenal 23.3% compound annual return compared to the 8.9% for the S&P 500. … Over its first ten years as a public company, Teledyne’s earnings per share (EPS) grew an astonishing sixty-four-fold, while shares outstanding grew less than fourteen times, resulting in significant value creation for shareholders. The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success Audible Audiobook – Unabridged William N. Thorndike (Author), Brian Troxell (Narrator), Audible Studios (Publisher) & 4.6 out of 5 stars 620 ratings. Moi, qui ai appris de Jean Gabin à aimer les femmes, je me trouve maintenant avec la photographie de Margaret Thatcher devant moi – dans le journal, bien entendu, qu’en bonne citoyenne d’après la Révolution française j’achète tous les matins – et je commence à penser que quelque chose est allé de travers durant ces trente dernières années de démocratie. [Bill Stiritz’s] protege, Pat Mulcahy, who would later run the business [Ralston Purina], described Stiritz’s approach to the seminal Energizer acquisition: “When the opportunity to buy Energizer came up, a small group of us met at 1:00 PM and got the seller’s books. Though prolific, Murphy was careful in deal-making, waiting years to find the right acquisition. All of this adds up to something much more powerful than a business or investment strategy. After the Lehman Brothers collapse, when all of corporate America was fearful, Buffett invested a massive $15 billion within 25 days. Amazon.in - Buy The Outsiders : Eight Unconventional CEOs And Their Radically Rational Blueprint For Success book online at best prices in India on Amazon.in. Three years of cost-cutting yielded $14 million in cash, which Buffett used to buy National Indemnity, a niche insurance company. This float was deployed to purchase other cash-generating businesses that fund subsequent investments. They also focused intently on manning the denominator through the careful financing of investment projects and opportunistic share repurchases. In 1995, General Dynamics acquired Bath Iron Works, one of the largest navy shipbuilders, for $400 million. Most of the CEO's I interact with don't have financial or CFO backgrounds, rising through the sales or operations ranks. To do this, they didn’t simply focus on the numerator, total company value, which can be grown by any number of means, including overpaying for acquisitions or funding internal capital projects that don’t make economic sense. Thirty years later, it was three times more valuable. Rather than adhering to a preset strategy, outsider CEOs evaluated all possible options at each point in time, then chose the option that was best. As a result of this, $2.5 billion was freed up. CEOs who run the businesses usually don’t hear from Buffett. Buffett was inspired by Benjamin Graham’s Value Investing approach. In 1995, Murphy sold Capital Cities to Disney for an extraordinary $19 billion, representing 28 times its net income. As CEO, Mellor continued to focus on operations. Buffett spent little time on traditional due diligence and handled all deals personally. Over the long term, this systematic, methodical blend of low buying and high selling produced exceptional returns for shareholders. Murphy bought KTRK, an ABC affiliate, for $22 million in 1967. Rather than optimizing for Wall Street’s preferred benchmark of reported earnings, Singleton took the unconventional approach of improving free cash flow. They were looking for talented, younger foxes with fresh perspectives. General Dynamics got $2.5 billion by reduction of its over-investment in inventory, capital equipment, and R&D and decreased headcount by 60%. The metric that the press usually focuses on is growth in revenues and profits. General Dynamics, a company with a stellar history of selling aircraft, ships, and tanks to the Pentagon, had a market cap of just $1 billion when revenues were around $10 billion. [pg 44], The conventional wisdom was that repurchases signaled a lack of internal investment opportunity, and they were thus regarded by Wall Street as a sign of weakness. Buffett structured Berkshire in such a way that he spent very little time on operations. Boards that hire an outsider CEO must deliberately adopt the mindset that it will give the new CEO some discretion and allow the new CEO to take some risks. The lessons of these iconoclastic CEOs suggest a new, more nuanced conception of the chief executive’s job, with less emphasis placed on charismatic leadership and more on careful deployment of firm resources. Jack Welch of General Motors, widely considered to be an all-time great, outperformed the S&P 500 by a factor of three. When the company made an acquisition or entered a new industry, it inevitably designated a top Capital Cities executive, often from an unrelated division, to oversee the new property. Singleton instead focused on improving operations. Several influential studies argue that the market for CEOs is well described by models with perfect competition and no frictions (Tervio 2008; Gabaix and Landier 2008; Edmans, Gabaix, and Landier 2009). Lockheed’s CEO made a counter-offer of $1.5 billion for the F16 division. Burke immediately stepped in to improve operations, reduce perks, and sell off excess real estate. 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