Goodbye Crazy Jack Ma
This year, hundreds of chief executives have dropped like flies. Some leave on their own terms, and others by “mutual agreement.” Alibaba’s Jack Ma bowed out yesterday. ‘Alien Ma’ is China’s most famous entrepreneur, paving the trail for e-commerce in Asia.
When head honchos depart, many leave both their posts and their stocks in limbo. Succession plans and policies kick in, but investors are still left with a decision to make about their holdings. Usually, the backstory tells you where the stock is going to go. Investors in a retailer held back from change will celebrate when the boss is finally ousted.
However, on the flip side of the coin, every so often you get a visionary. A once-in-a-century CEO will come along to provide leadership to a company in need, becoming a pillar of the stock price. Some people, like Jack Ma, are irreplaceable competitive advantages at the helm. Investors don’t protest his salary, will happily pay premiums for Alibaba stock, and may soon show just how much they miss him by depressing the stock price. So, if BABA does go down, is that a dip worth buying?
The success of a long-term investment will rest on the success of a company’s long-term succession planning. Hiring from within is the mantra, and it usually works out much better when the previous CEO isn’t involved! Some of even the most acclaimed managers would rather pick an ill-equipped predecessor to flop, if it gave their own managerial touch a greater mystique. Watch out, and be nosy about the talent pipeline at your companies!
If the CEO of one of your stocks is hit by a bus tomorrow, what’s your plan?
