10 Traits Of A Great CEO

A on how I judge management

1/ Track Record Of Outperformance

Winners keep on winning

Ask: Has the business outperformed under this CEO?

Market share growing?
Revenue increasing?
New products/services selling?

Invest in CEOs with a proven track record of success

2/ Great Communicator

Do they explain their decisions?
Do they teach when they speak?
Do they use industry jargon or plain English?
Do they have an investor presentation?
Do they provide a shareholder letter?
Do they speak clearly?

Communication skills matter

3/ Skin in the game

Do they own a lot of company stock?

You want the CEO to be hurt financially if the stock price goes down (just like you will)

Check out the proxy statement (DEF 14A) & recent insiders filings to find out

4/ Great Employee Ratings

Who knows a CEO better than the company's own employees?

Check out @Glassdoor / @Comparably / @indeed to see what the employees think of the CEO

Even if you've never heard of $ADBE's CEO Shantanu Narayen, it's clear that his employees LOVE him

5/ Young

I love investing in CEOs that will be at the helm for decades

That's much more likely to happen when the CEO is under 40 instead of over 60

6/ Delivers Results

Great CEOs consistently blow past Wall Street's targets

If they issue guidance, they have a habit of beating it

7/ Mission-Driven

Great CEOs are energized by the company’s mission

Not by their own compensation

Don't think mission statements matter? This thread might change your mind https://twitter.com/BrianFeroldi/status/1346812390613127170?s=20

8/ Founder (or long tenure)

I love investing behind founder-led management teams

Marcos Galperin at $MELI
@jefftgreen at $TTD
@reedhastings at $NFLX
@jack at $SQ

If not the founder, I want the CEO to be at the company for 5+ years

9/ Great Capital Allocator

Do their R&D investments pay off?
Do they pay a dividend?
Buyback stock?
Paydown debt?
Make tuck-in acquisitions?
Do they get high returns on their investments?

Capital allocation skills matter!

10/ Shares credit. Admits mistakes. Accepts blame.

Great leaders credit THEIR TEAMS for their success

Great leaders ACCEPT BLAME for their mistake

@WarrenBuffett recent shareholder letter shows this in spades

If you enjoyed this thread, you may enjoy my other threads

Here is a list of all the other threads that I’ve written https://twitter.com/BrianFeroldi/status/1386309937597321218?s=20

I regularly tweet about money, investing, and self-improvement

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If you want to learn more about how to invest

I teach beginners how to research stocks on my YouTube Channel https://www.youtube.com/c/brianferoldiyt

To summarize, great CEOs:

1: Track record of outperformance
2: Great communicator
3. Skin in the game
4: Great employee ratings
5: Young
6: Deliver results
7: Mission-driven
8: Founder (or long-tenured)
9: Great capital allocator
10: Shares credit / accepts blame