Core Portfolio Insight: Teledyne Technologies (TDY)

Core Portfolio Insight: Teledyne Technologies (TDY)

April 13, 2022
Share |

Henry Singleton, an electrical engineer, founded Teledyne in 1960. According to a 1979 Forbes article, Teledyne, led by the unique thinking of Singleton, was one of the most profitable multibillion dollar companies in the U.S. Eventually, Teledyne merged with Allegheny in 1996 and again became independent in 1999. Over the last 20 years, Teledyne transformed from an aerospace & defense company to the electrical hardware company that it is today. Teledyne makes differentiated imaging products and unmanned systems that are sold into niche markets with few competitors. Teledyne operates an acquisition strategy, acquiring 64 companies for a total $11.6 billion since 2001. Its biggest acquisition was FLIR Systems in 2021 for $8 billion. [1] [2] [3] [4]

What type of electrical hardware does Teledyne make? One of Teledyne's key markets is monitoring ozone and pollution for the Earth. As the importance of environmental sustainability increases, Teledyne's sensors will be essential for NOAA and NASA to monitor the Earth's atmosphere. Another market segment that is getting more attention lately due to geopolitical events is aerospace & defense. Teledyne makes electronics used in military aircraft (F-35 platform, for example) and missile systems. Next, the global pandemic led to people focusing more on indoor air quality, which is causing increased demand for the many instruments Teledyne makes that measure air quality for spaces like airplanes. Continuing, autonomous vehicles, like drones and subs that analyze oceans, contain Teledyne's electronics. In highly demanding environments like the ocean, it is much more difficult to produce quality electronic hardware, so Teledyne's long history of engineering allows it to have leading products in this market. Finally, Teledyne offers products like thermal cameras for firefighters and industrial vision systems for food safety, life sciences, and more. [1] [2] [3] [4]

We believe Teledyne is a GPM Grade Company well-positioned to benefit from trends in environmental sustainability, the commercial aerospace recovery, healthcare, and national defense. Teledyne generates strong cash flows to invest internally for growth and make smart acquisitions. We believe Teledyne's management is focused on long-term sustainable growth and promotes a unique culture within. Teledyne has the size and scale to compete and win worldwide, while focusing on niche products with high barriers to entry. 

Sources:

1. Teledyne Investor Presentation - March 2022

2. Teledyne CSR Report

3. Forbes 1979 article

4. Teledyne Technologies Inc at Cowen Aerospace/Defense & Industrials Conference

 

Disclosure:

This blog post or document contains information about a company that is owned in portfolios managed by GPM and is intended exclusively for GPM clients. While this company is owned in a broad cross section of GPM managed portfolios, it should not be implied or assumed that every client portfolio or account currently holds this stock. Data presented is from sources we believe to be reliable. The opinions and commentary presented reflect our best judgement at this time, and may include “forward-looking statements”, all of which are subject to change at any time without obligation to update them. Shares of this stock are NOT held in accounts that invest exclusively in ETFs or mutual funds. Actual future results may be different than our expectations. There can be no assurance that your investment objectives will be realized. Investing involves risk and losses can occur.