The Melbourne cup was run 2 weeks ago. In racing we all know to bet on the jockey and the horse well its the same for investing. Fundstrat put together a great diagram of the greatest CEOs. As you can see on the top right the best performing CEO is John Malone the cable king. $100 invested with John is now worth $315,337 his returns put him in a similar class to Warren Buffet. John helped consolidate the cable industry his approach was to grow free cash flow, minimize taxes and buyback shares. He also had good timing buying and selling investments, his current holdings include Liberty, Discovery Communications and LionsGate.
Sleep at night factor
It's safe to say we all know Elon Musk and the others but one name I was least familiar with was Scott Thompson. He also has the best compound track record he was previously the CEO of car rental firm Dollar Thrifty which he sold to Hertz. In September he was named CEO at Tempur Sealy (TPX) the world's largest and most profitable bedding company. It's a well known global brand yet international sales are only 18% also in a world that is changing so quickly it's hard to see a mattress getting replaced or disrupted! On average mattresses last 8-10 years apparently over 80% of Americans still sleep on a mattress with a spring also unlike other industries the price for mattresses keeps going up. Their brands are below.
The TPX team is very motivated with 1.34 million restricted stock units given to management if they achieve EBITDA of $650 million for 2017 the estimate for this year is $462 million. In his first conference call Scott mentioned that he was attracted to the business because "I was impressed with the following: the industry's consistent history of unit and pricing growth, the importance of bedding products in people's lives, the worth of the industry's brands, marketing and services to retailers, the healthy margins both for the manufacturers and the retailers, lastly, the great free cash flow attributes of the industry." If history is any guide the new CEO should be able to help TPX shareholders sleep at night even without one of their mattresses.
Jason
Decisive has no position in Tempur Sealy (TPX). The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
