Investing in Superstar CEOs

Henry Truc |

Superstar CEOs Bill Gates Steve JobsWhen stock investors pick and choose which company to buy, taking a long, hard look at the management is one of the main factors that goes into shrewd decision making. But there are a few companies whose stock price is more influenced by the market's fascination of their CEOs than what's going on at the company itself. For example, investors holding Berkshire Hathaway (NYSE: BRK.A) are in essence investing in Warren Buffett's financial acumen. The same could be said for Apple (NASDAQ: AAPL) investors and the vision and innovation of Steve Jobs.

Whether you call it the Walt Disney Effect, the Steve Jobs Effect, the Warren Buffett Effect, or the [insert CEO name here] Effect, there are just some companies that are just absolutely reliant on the brilliance of their leaders--regardless of whether it be perceived or reality.

Yes, the head honcho of any company has a direct impact on the performance of a company and its stock. But in the instances of Buffett, Jobs and only a handful of others in this group, we're talking about individuals that are as close to literally irreplaceable as they come.

Company Leaders, Market Movers

Whether they founded the company or took over the reigns from a predecessor, a market-moving CEO is someone that has a vision to innovate an entire industry for growth, not just someone who slashes operating costs to eek out a few extra dollars in shareholder value. In return, they make a name for themselves that, at times, makes them larger than even their company. Bill Gates is another prime example. Microsoft Corp. (NASDAQ: MSFT) was just his vehicle. Look at what the company has accomplished since his departure. Or Jack Welch of GE (NYSE: GE). These guys are in the CEO Hall of Fame.

But sometimes, CEOs gain their credibility by just being at the right place, at the right time. Like Jamie Dimon, who gained a wealth of credibility for navigating JP Morgan Chase (NYSE: JPM) away from the financial crisis. Dimon got the spotlight, but by all accounts, it was a team effort.

Up and Coming CEO Superstars

But everyone knows Steve Jobs, Warren Buffett and Jamie Dimon. And two of those guys are probably in the twilight of their era, as shareholders of Apple and Berkshire Hathaway are growing more and more concerned about finding their successors each passing day. So who are the next generation superstar CEOs? Here are a few names to consider:

  • Larry Page of Google (NASDAQ: GOOG): He recently took over the reigns from Eric Schmidt, who headed the company over the last decade. The talk now is that the search powerhouse is looking to get back into growth mode. Google's cash cow has always been search advertising, and while new ventures have spurred innovative game-changers, they've also mostly flopped financially.
  • Mark Zuckerberg of Facebook (Private): The youngest billionaire ever and one of the more controversial figures is also probably the hottest name right now. If Facebook ever goes public, there's little doubt that investors would be willing to put their money on Zuckerberg.
  • Alan Mulally of Ford (NYSE: F): Granted, the U.S. auto industry is a shaky place to look for innovation, but Mulally and Ford have been spearheading the fuel-efficiency revolution. But while the company recently beat out GM in total sales for March, Mulally's spike in compensation last year is drawing some ire.
  • Reed Hastings of Netflix (NASDAQ: NFLX): While the company made its fame and fortune in the movie mailing business, it has smoothly transitioned into an online video streaming company, and those that haven't been paying attention probably didn't even realize the switch. Then again, you'd have to be living under a rock to not have noticed what's going on with this stock market darling.

While there are still many more names to go through--John Chambers of Cisco (NASDAQ: CSCO), Howard Schultz and his sequel at Starbucks (NASDAQ: SBUX), George Buckley at 3M (NYSE: MMM), and John Martin of Gilead Sciences (NASDAQ: GILD) to name a few--a top executive moving into the ranks of the elite requires more than just vision and innovation. They also need a combination of media savvy, force of personality, and almost a cultish following that almost make investors believe they can do no wrong.

What are some other names that you think have the potential to be the next superstar CEO?

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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