Bill Lippman
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Bill Lippman

Taking stock of a celebrated investor

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Bill Lippman

Why is William Lippman, at age 84, still working as a money manager? Why doesn’t he hightail it to Hawaii or Provence, relax on a hammock near some soothing body of water, enjoy cool breezes, sip expensive Champagne, listen to Mozart, and re-read Mark Twain or Jane Austen – instead of working in either too-hot or too-cold or too-rainy or too-noisy or too-dirty New Jersey?

“What a good idea!” he jokes to a reporter. “I never thought of that!”

Actually, he loves what he does. “Every day is different,” he says. “Every day surprises you.” In fact, it’s a message he repeats to his grandchildren: “If you love what you do, you’ll never work another day in your life.” He adds: “They must be tired of hearing it by now. But I tell them, if I tell you the same thing three times, you can tell me to stop telling it.”

What he has been telling people lately is that, a few years from now, investors will look back at the stock market in the year 2009 and very likely kick themselves for not having bought stocks when they were such screaming bargains.

Lippman, who works for the Franklin Funds in Fort Lee, is a careful, sagacious fellow and doesn’t make predictions lightly. In fact, he loathes the notion of making predictions. “I don’t know what’s going to happen tomorrow, or next week, or later today,” he insists modestly. Still, he’s pretty darn sure that stock prices will rise smartly in the next few years.

Lippman is a “value” investor. He looks for companies whose stock is selling for less than the company is really worth – going for maybe a mere 80 cents on the dollar. (The opposite of value investors: “growth” investors, who gravitate toward stocks of hot-as-a-pistol companies, even though the prices of these stocks is in what is known as nose-bleed territory. Think: Google.)

Value investors tend to be patient, waiting for investors in general to finally smarten up and recognize a stock’s true value; growth investors need to be impatient, always poised to sell as soon as a hot stock begins to cool down, as it inevitably will.

As an investor, Lippman certainly is patient. He will wait for years for his stocks to be recognized for the lovely swans that they are and not just ugly ducklings. When his funds actually do spectacularly well and people ask him what he has been buying recently, he explains that stocks he bought perhaps four or five years ago are the ones doing wonderfully now. And right now, he believes, many stocks are selling below what they are obviously worth – the value of their tangible assets like property and equipment. “People will look back in three or five years and say, my goodness, they were giving things away! That’s the real key to investing: having a long-term view.

“We’ll keep stocks for five, eight, or even 15 years in some cases.”

So, what ugly ducklings does he like now? He refers his questioner to the stocks in one of his signature funds, Franklin Rising Dividends.

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Lippman stays active in Jewish and other communal affairs. He’s on the board of the Jewish Home in Rockleigh and the JCC Kaplen JCC on the Palisades in Tenafly, as well as of the Arnold P. Gold Foundation in Englewood Cliffs, which fosters humanism in medicine. He’s visited Israel three times (“I loved it”), and one of his granddaughters was bat mitzvahed there. (His daughter Debbie, a marketing executive, is married to Stuart Himmelfarb, chief marketing officer of the UJA Federation of Northern North Jersey, whom Lippman calls a “good man.” Lippman’s son, Howard, is a first vice president for Merrill Lynch in Fort Lee. His wife, Sheri, is a docent at the Metropolitan Museum of Art.)

But although he is generally an optimist, he isn’t especially sanguine about the prospects for peace in the Mideast. “Someone has to give in, and while I’d love to see it, I’m dubious.”

An unavoidable question: That scoundrel Bernard Madoff happens to be Jewish. Why are so many Jews in business and finance?

Lippman quickly points out that he is no authority on such matters, but historically Jews were not allowed to own property or to be farmers, so they went into finance and selling jewelry. He himself was once urged to buy “alternative” investments, and the name of Madoff came up.

How, Lippman inquired, has Madoff been able to consistently rack up positive returns? Ten or 15 percent a year, with never a down year? Reply: It’s a secret. Lippman didn’t hesitate. He said forget about it. “It could have been expensive,” he says today. He quotes Warren Buffett, another value investor, as saying, “If you don’t understand it, forget about it. That says it all.”

As a money manager, Lippman himself is proud that he has helped make his clients prosperous – able to retire comfortably, send their kids to good schools, pay for good medical care.

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In a photo taken in 1962, William J. Lippman, right, president of William Jennings and Co., mutual fund distributors, discusses investment prospects with the legendary Sir John M. Templeton. the record photograph

When he entered the business, he recalls, ordinary working Americans would regularly buy expensive life insurance, paying the salespeople sizable commissions. They’d fork over $50 or $60, month after month. He persuaded many of them to invest in the stock market instead – with far more profitable results. Not only that, but he explained to them the fundamentals of investing – as he continued to do, for many years, in a course he gave at Fairleigh Dickinson.

“If John D. Rockfeller had $100 million to invest,” he would tell people, “he wouldn’t put it under his mattress. He’d hire someone to invest his money. Someone who would diversify that money – because there’s no one answer. And you can diversify through mutual funds. So it’s possible for the average citizen to invest the way John Rockefeller would invest.”

What about the fact that his funds have sales charges? They’re not “no load”? He and other money managers, he replies, have to be paid somehow. And he is aware that Sir John Templeton, a legendary investor, was once asked to justify the fact that his funds had sales charges. Sir John’s answer: Twenty years before, a fellow had invested $10,000 in one of the Templeton funds, and he’s since become a multi-millionaire. “And he doesn’t mind having once paid me $800 to become so rich.”

Something else Lippman is proud of, besides helping make his clients well-to-do, are his innovations. He has not only a quick mind but a fertile mind. It was he who dreamed up the idea of investing in stocks that regularly raise their dividends – in other words, stocks of companies that consistently do well. Franklin Rising Dividends, to this day, gets four stars from Morningstar, the bible of the mutual fund field, which writes: “Investors should stick with this well-run fund.”

Lippman once put together a memorable panel discussion back in 1988 for the Investment Company Institute, featuring three splendid contemporary investors: Philip Carret of the Pioneer Funds, who was 88 at the time; Max Heine, in his 70s, who started the Mutual Series funds, now here in New Jersey; and Julian Lerner of the AIM funds. It was during this session that Heine, asked to explain why three money managers could get 18-percent-a-year growth rates with vastly different strategies, made this memorable comment: “All roads lead to Jerusalem.”

Carret, whose hobby was witnessing eclipses from all over the world, is one of Lippman’s role models. Not only was he very smart, Lippman notes, but he loved working. He worked until he was 100 years old – and died at 101.

Another innovation of Lippman’s: a fund that invests in closed-end funds. It’s too complicated to get into, but it was another compelling, outside-the-box idea.

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Lippman is one of those people whose company you always enjoy. Some of his staff at Franklin have been with him for years and years. He’s polite, unpretentious, full of sparkling conversation, well-informed, and blessed with a lively sense of humor.

A slender, wiry gentleman, Lippman played on his college’s tennis team. This reporter has continually challenged him to a tennis match, but Lippman has put him off. Finally, able to bear it no longer, Lippman said, “Look, I’m blind in one eye and I can’t move around much these days. But [pause] I’d beat you, six to two.”

The reporter promptly shot back: “Six to three!”

Lippman laughed.

What books would he recommend to investors? Benjamin Graham and David Dodd’s “Security Analysis,” the bible for value investors. “I read it 60 or 70 years ago, and I had bought it used, for $2.50 – great bargainer that I am!”

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Bill Lippman’s father, Henry, died at the age of 47, when his son was 10. He had been a businessman in Europe, and could speak a number of languages – “He was very smart, as I remember” – but like many other businessmen, he was wiped out in the Depression. Bill’s brother, Leopold, was 16 at the time, and he died at 65 – having earned a Ph.D. at the age of 50.

His family faced tough times. His widowed mother kept moving them from apartment to apartment in Manhattan and the Bronx every few years – because, whenever you got a new lease, you were entitled to a few months free rent.

He was drafted during World War II, and after serving three years he returned to City College – because it was free, and because he wanted to remain in the New York area. He graduated from City in only three years, in 1967, at age 22, then got an MBA in finance from New York University, attending mostly at night.

Finding a job then, as now, was no cinch. So, in effect, he created his own job.

He had studied marketing in school, and decided that was where the jobs were. So he checked marketing companies, and went door to door trying to get past the receptionist – almost always unsuccessfully. But at one CPA firm, a fellow named Walter Porzer came out of his office and asked, why are you here? He didn’t have a job opening, he said, but a client of his, Pavelle Color, was in the photo-finishing business – those were the days when you took film to drugstores and other places to be developed. How could Pavelle improve its business? Lippman could visit the stores and question the various people there, over five or six weeks. Lippman developed a comprehensive questionnaire, did a bang-up research job – and then persuaded Pavelle to hire him to do sales promotion. He worked there for three years.

But he had fallen in love with investments. Taking that MBA course at NYU, he had met a lot of Wall Street people – “and I was thrilled with the idea of the investment business.”

For a while, he sold different mutual funds. Eventually he founded and became president of his own fund company, the Pilgrim Group. He sold it in 1984, but while he could afford to retire, he didn’t want to – at age 59. He was healthy. So he called his friends at L.F. Rothschild, a venerable investment firm, and was welcomed on board. Then came 1987, and the market lost 20 percent in one day – and Rothschild went out of business. Lippman was asked to help sell some of the assets, and had started doing just that. “Then in walked Charlie Johnson, head of the Franklin Funds in San Mateo, who was interested in taking over the four Rothschild funds.” He also said what Lippman calls “the magic words: We want you.” Lippman was complimented. His response: “You got me.” Naturally, he insisted on working in New Jersey, not in sunny California.

Lippman’s title is president of Franklin Advisory Services. He admires the Franklin organization, which now owns the Templeton funds as well as the Mutual Series funds. “They have lots of smarts and total integrity,” he says. “I’m comfortable with them. They do all the administrative work – everything but running the money.”

He’s been with the Franklin group for 21 years – and has been managing money since 1955, or almost 55 years.

These days, he still works five days a week, from 8:30 in the morning to 5 or 6 at night. “I love it,” he explains. “A plumber may not see anything new in his job, but I see new things very day.” He uses a computer in his office, but doesn’t have one at home. He does have a cellphone, but keeps it in his car. He has an e-mail address, but discourages people from using it.

His wife, Doris, died in 2005. They had met when he reunited with three old Army buddies after the war. Together they visited a resort in Milford, Conn., and one of his buddies encountered a woman he knew, walking with two other women. One of them was Doris. Lippman and Doris were together for 60 years.

What, he asks, if he hadn’t been walking with his pals at that time of day? What if his friend didn’t happen to know one of the three women?

“Life is capricious,” says Lippman. “And I’ve been extremely lucky. Life has been very good to me.”

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