Sir John Templeton, who died last month near Nassau, in the Bahamas, at age 95, was renowned through his Templeton Growth Fund both for taking an intrinsic value approach to equities and for being one of the first U.S. fund managers to scour the globe for opportunities. But in recent years the Tennessee-born Templeton — a naturalized British citizen who was knighted by Queen Elizabeth in 1987 for his philanthropy — was as well known for his John Templeton Foundation as for his investing skills. The foundation funds research and awards prizes for work in science and the humanities. The devout but ecumenically minded Presbyterian was particularly interested in what he called “spiritual progress.” According to its Web site, the foundation’s mission is “to serve as a philanthropic catalyst for discovery in areas engaging life’s biggest questions. These questions range from explorations into the laws of nature and the universe to questions on the nature of love, gratitude, forgiveness and creativity.”
Sir John founded Templeton Growth in 1954. Long before his U.S. competitors, Templeton found bargains in, for instance, the then-flattened Japanese stock market. By the 1980s, when investing in Japan had become de rigueur for U.S. asset managers, Templeton had taken his profits and moved on. In 1992 he sold the firm, then named Templeton, Galbraith & Hansberger, to Franklin Resources for $913 million and retired.
Invesco CEO Martin Flanagan started his career with Templeton and was its COO at the time of the sale to Franklin. He stayed with Franklin, becoming its CFO and finally co-CEO before joining Invesco in 2005.
Flanagan remained close to Templeton, visiting him annually at his Bahamas home. He says his mentor combined intellectual curiosity and open-mindedness with a determination to avoid following the herd on Wall Street. He also noted Templeton’s kindness and generosity. Templeton liked to begin Saturday morning executive committee meetings at his firm with a prayer, but in what Flanagan calls “a very acceptable way” that didn’t alienate non-Christians or nonbelievers.
Flanagan recalls Templeton’s response to investing consultants who warned during a Saturday morning meeting in the 1980s that he was dangerously underexposed to rising Japanese equities. Flanagan says: “We had basically one stock, we had very little invested in Japan. These third-party consultants said, ‘You are taking a tremendous risk.’” Templeton, however, refused to be lured back into the market by valuations in excess of 50 times earnings and said so. “It was very unpopular, and there were a lot of unbelievers in the room,” Flanagan notes. That stand made life difficult for the firm’s sales force at a time when funds with heavy Japanese exposure were hot items. The subsequent collapse of Japanese equities proved Sir John right.
Was Flanagan surprised? No, he says: “By then I had drunk the Kool-Aid. And I mean that in the best possible way.”
