The drama with leadership at one tech company has been one of the most high-profile I’ve ever seen.
The Friday before Thanksgiving, OpenAI’s board of directors fired CEO Sam Altman.
Over last weekend, they asked him to come back to the company. But they changed their mind again, and he left without a job.
On Monday, Microsoft (MSFT) said it was hiring Altman.
Then 95% of OpenAI’s employees threatened to quit and follow Altman to Microsoft.
Finally on Tuesday, OpenAI’s former board of directors resigned and Altman returned to the company.
It was a power struggle with enough drama for a TV show.
But why does it matter who is CEO?
I’ve spent a lot of time interviewing and getting to know CEOs over the past few years. And today, I’ll share some of the insights I’ve learned about these leaders.
A CEO may be just one person, but they’re responsible for a lot. They set the strategy, carry out the plan, and create the culture that leads to the company’s success or failure.
OpenAI is one of the companies creating the most advanced artificial intelligence (AI) programs. So its CEO could have a big impact on how quickly the technology develops and how it’s used.
And for investors, a company’s CEO can be the difference between market-beating returns or a losing stock that goes nowhere. Let me show you why…
How CEOs Impact Stock Market Performance
A study by Harvard Business Review showed that CEOs influence 15% of a company’s profitability and total return to shareholders.
Research from consulting firm McKinsey says that CEOs account for 45% of a company’s performance.
Whatever the actual number is, it’s clear that CEOs have a significant impact.
Take Microsoft for example. The company has had three CEOs since its founding – Bill Gates, Steve Ballmer, and current CEO Satya Nadella.
If you had invested in Microsoft in 1990 when Bill Gates was in charge and kept it until January 13, 2000, when Ballmer took over as CEO… It would have returned 8,858%. That’s nearly 21x better than the S&P 500 during that same time.
While Gates was leading the company, Microsoft developed and sold Windows and Microsoft Office software.
But if you bought Microsoft when Ballmer became CEO and held it until Nadella got the job on February 4, 2014… You would have lost 9% while the S&P 500 gained 58%.
Under Ballmer, Microsoft got left behind as other companies took over the latest tech trends. Google took over internet browsers and search. Apple won the smartphone market. Microsoft later tried to buy Yahoo and Nokia. But it was too little, too late.
And if you bought Microsoft when Nadella took over and held it until today, you’d have gained 1,119% – 5x better than the S&P 500.
With Nadella leading the company, Microsoft became a cloud computing giant. It also bought networking and collaboration sites like LinkedIn and GitHub, beefed up its video games business, and invested in AI.
As you can see, the same company with a different CEO can take a completely different approach to business. And that translates into the performance of its stock.
Profit From Quality Companies with Brilliant CEOs
Here at the Wide Moat Research, we’re focused on finding the safest income investments on the market. And an important part of investing is finding quality companies with brilliant CEOs.
We look for CEOs that have a clear strategy, create a strong culture, focus on achieving goals, and help the company grow by building new relationships and capabilities.
That’s one of the reasons we hold Microsoft in our SWAN (Sleep Well at Night) portfolio. Subscribers of our Intelligent Income Investor service who followed our recommendation to buy the company are up more than 57% on their investment.
Without a doubt, Microsoft’s $13 billion stake in OpenAI could lead to higher profits in the future.
And this is just one of many successful holdings in our SWAN portfolio.
My team and I are constantly looking for the highest-quality dividend paying companies the market has to offer… Companies that have experienced and growth-focused CEOs helping them prepare for the future roll out of AI across all industries.
With a capable CEO in charge, you can safely profit from these companies’ secure dividends and create a growing income stream that will passively support your lifestyle with stress-free investments.
And I recently released my top picks for 2024. So if you want to profit from our favorite quality companies and their brilliant CEOs, join me at Intelligent Income Investor.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily