CEOs & Your Gains: The Good, the Bad, the Ugly
I only know a handful of CEOs who say what they mean and mean what they say.
Some are destroyers of shareholder value.
They make terrible decisions and foolish acquisitions. And they don’t allocate capital properly.
MicroStrategy’s CEO, Michael Saylor, is one of them.
In 2020, it seemed like MicroStrategy was on its last leg.
The stock was stagnant, and the company struggled to keep up with its competitors.
So, Saylor decided to spend $250 million — half of its corporate reserve — and convert it into bitcoin.
And Saylor kept going. The company doubled down and spent $1 billion on the cryptocurrency.
You can imagine how that ended…
It completely backfired. On Tuesday, MicroStrategy announced its seventh quarterly loss in the eight quarters since it started buying bitcoin.
I wish his shareholders a lot of luck — they’re going to need it.
But Saylor isn’t the only CEO that investors are focusing on. As companies battle inflation, the heat is on for CEOs to deliver.
So, right now, all of them are under a microscope. And if they don’t deliver, they’re being shown the door.
But I don’t want you to think that all CEOs are chumps. There are a handful of rock stars out there…
Warren Buffett of Berkshire Hathaway, Jeff Bezos of Amazon and Reed Hastings of Netflix come to mind.
And a recent guest on my Real Talk podcast, Dave Cote, sure ranks up there with the greats.
Cote became CEO of Honeywell in 2002.
At the time, the board of directors didn’t have confidence in him. In fact, they told the CFO not to show him the company’s financials!
When he finally did gain access, he realized Honeywell was in worse shape than he thought.
Many on Wall Street were saying the company couldn’t be salvaged. And even if it could, Cote certainly wasn’t the No. 1 choice to do it.
I shared with him my thoughts at the time. I don’t Real Talk some of the time, I do it all of the time.
I said: “Dave, I gotta be honest with you. I never thought you could pull off what you did.”
He paused, and then let out a big laugh. “Charles, join the club. Neither did a lot of people.”
But Cote didn’t listen to the naysayers. He went straight to work and got the job done…
From Zero to Hero
During his 15 years as CEO, Honeywell’s market cap grew from $20 billion to $120 billion.
Plus, the company’s share price increased by 800% — nearly 2.5X the return of the S&P 500 during that time.
And in 2013, he was named Chief Executive magazine’s CEO of the Year.
Cote’s one of the few CEOs who says what he means and means what he says.
They are about as rare as a hen’s teeth.
That’s why I focus on knowing who the CEO is and what their track record is.
Because at the end of the day, the buck stops with the CEO.
CEOs Have Impact
I know the importance of a CEO and their impact on returns.
That’s why every company in the Alpha Investor model portfolio is run by a rock star.
Because over the long term, great businesses run by rock-star CEOs are slam dunks.
I’m honored and privileged to know people like Dave Cote — and call him a friend.
That’s why I want you to listen to our interview. Cote’s story is what’s being done right in corporate America.
Afterward, Alpha Investors should check out our model portfolio to find out which companies with rock-star CEOs are still trading at bargain prices.
And if you aren’t yet a member, you can find out how you can gain access to this portfolio right here.
Founder, Real Talk