Disciplined Opportunism: Templeton and Price Revisited

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A few weeks ago, Barron’s magazine mentioned a book that doesn’t get much play these days titled The Money Masters, authored by John Train. Train’s book was published in 1980 and contained biographies of nine great investors. Warren Buffett, Phil Fisher and Larry Tisch each had their own chapter. Names that have been forgotten in time are in there too. However, the chapters on Sir John Templeton and T. Rowe Price were the most interesting for the circumstances of today. Templeton’s career was built on practicing a value-oriented discipline in global markets that were under-owned for much of his career. Price was a growth stock investor that recognized in the late 1960’s that his style of investing was likely overcrowded. Both men sought to avoid popularity by the end of their careers and understood how the coming and going of seasons can change an investor’s view of a stock as prices go up or down.

Templeton had a global mandate for the Templeton Growth Fund that allowed him to invest in both U.S. and non-U.S. stocks. Train explained some of Templeton’s reasoning:

Incidentally, the willingness to invest in many countries ties in with a willingness to buy “junior” stocks. Quite often the smaller, cheaper, faster-growing company is outside the U.S.

Train’s description of this Templeton-framed view is a perfect picture of our investments in the media industry. Everyone wants to debate who will be the winner of the future of media. Will it be big-cap tech or will traditional media players win the war? The names thrown around in this discussion are Netflix, Amazon, Disney, Comcast, etc. We have what we believe to be incredibly profitable franchises in Discovery and Tegna that produce non-scripted shows.

These are Templeton-style “junior” stock holdings because they lack ownership by managers of size. The shareholder registry is littered with un-notable asset managers and ETFs. In effect, there is a lack of sponsorship of these companies. They do have some of the most successful media investors of all time in the shareholder rolls, in particular, Discovery’s John Malone. Follow the billionaires, not Wall Street. Secondly, these unscripted shows have lower production costs, especially relative to the people splashing money around Hollywood today on shows like Game of Thrones or The Crown. Producing cheap content that is profitable is better than selling expensive content and losing money. This requires us to not be found at the Emmy’s or the Academy Awards while people stroll down the red carpet while the red ink blends in.

Rowe Price’s name is synonymous with long-term ownership of outstanding growth businesses. Price referred to his investment approach as looking for “fertile fields of growth.” For Price, this meant “identifying an industry that is still enjoying its growth phase, and settling on the most promising company or companies within that industry.” Price’s firm became a notable owner of some of the great growth stories of the 1950’s and 1960’s like Black & Decker, 3M, Honeywell and Merck.

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