Thursday, October 25, 2012

CEO dead pool

There is an old-and-in-bad-taste game of celebrity dead-pool. The object is to pick famous people who will die in the next six months. Points are scored inversely to age and also for high profile picks that nobody else guesses.

As I said, it is in bad taste.

With a small bunch of hedge fund managers I play a less macabre version of that game. Whether it is in bad taste or not I will let you (dear reader) decide.

We call it CEO dead-pool.

The job is to pick CEOs of large companies (more points for larger companies) who will in the next 18 months either be sacked or forced to resign in disgrace.

Extra points if the CEO had a fine reputation or if the company was very large. Double-points if you can predict the thing that causes the disgrace. [People who play this game get very interested in which CEOs are having affairs whilst espousing moral-conservative values...]

This game is a way of telling which hedge-fund managers really know the companies and management they are invested in. For us it is work - but it has a nice non-monetary way of keeping score. It is highly equalizing between the lowly analyst and the big-name manager. (Some managers excuse their lack of specificity by complaining that there are just too many candidates...)

This is a formal invite for suggestions/entries. A pick of one or two is fine (sent by email). In June 2014 I will announce the winner. Bragging rights are worth something. For a junior being the winner is probably worth a job. (Plenty of hedge funds want young analysts who really know their stuff. And what better way is there to prove you really know your stuff?)

If there are not enough good entries I might reveal my pick - to get the ball rolling...




John

PS. I would love Bess Levin to link this post. I am sure her readers could come up with some really good suggestions...

56 comments:

Intrinsic Value said...

Long shot.
Gerry Harvey, Harvey Norman

Anonymous said...

Jamie Dimon. He's already fallen halfway of the pedestal.

Anonymous said...

Given enough entries it is highly likely that the winner just got lucky.

John Hempton said...

I am trying to remove the luck bit by suggesting that the winner needs to provide detailed reasons.

I might have to publish my own guess to demonstrate.

J

Anonymous said...

OK John,

I'd start the ball rolling then--Marissa Mayer of Yahoo!.

Yahoo's board wanted a CEO of Steve Job's ilk, a curator who who can tie Yahoo's disparate web properties into a greater whole.

So they see Marissa and they say,"Marissa's a product person and she was also in charge of Google's search products---just the right person to lead Yahoo because Yahoo is all lost at sea when it comes to products and it also needs someone to turn around Yahoo search."

Wrong! Because you see Marissa's a product MANAGEMENT person, not a PRODUCT person.

For christ sake, Marissa's the person who'd convene a meeting just so that she can have a discussion/debate on the shade of blue that should be used on Google's homepage.

To Be Continued.....

Ross said...

Ok, I have two.

Robert McDonald at Proctor & Gamble.
-PG is stuck with slow growth and an increasingly uncompetitive pricing position. Ackman is going to get frustrated and call for a break-up. McDonald's departure will be a conciliatory gesture.

Hubert Joly at Best Buy
-He's going to quit. Soon. Best Buy cannot be salvaged in it's current form. They're price sensitive with a limited value proposition. Bonus: I expect Robert Schulze to get a crack at the turnaround.

vijay parikh said...

John Chambers at Cisco Systems. He (truly) does not know the difference between a router and a switch. He missed the data center, virtualization, SDN and service migration trends and instead invested in the consumerization by buying Flip video (closed down now) and home routers (20% gross margin). The Board is unfortunately stcaked with those who have been previously fired (Fiorina, Bartz, Yang etc...) so it should be considered a well deserved scaking but a long shot

Anonymous said...

Dan Hesse. He is a manipulative kind of CEO. Impossible to know what will happen, bones may come out of the closet after the Banksoft deal closes or Banksoft may get upset by the lack of results and cash spend.

Anonymous said...

Steve Ballmer. When Windows 8 totally flops, he'll have to go.

Anonymous said...

OK -- I'll throw my hat in the ring with a crowd-pleasing long shot:

David Rubenstein will be drummed out of Carlyle Group.

The Company will complete the purchase of Focus Media, but will promptly find its new acquisition to be a tungsten block with a layer of gold-ish spray paint. But this alone will not be the catalyst.

Rubenstein's exit will be precipitated by the disclosure that his personal stake in Focus Media was enormous and that he orchestrated the buy-out as an exit strategy to the detriment of the other GP directors. Then the knives come out....

NB -- I have zero basis for making the foregoing statements and offer them for their comic value alone!

Cheers from NYC!

CrocodileChuck said...

Meg Whitman, HP, for glaringly obvious reasons, outlined by yourself, John, in your multi post series on the evolution of computing last year.

William said...

Meg Whitman, HPQ

MaysonicWrites said...

Steve Ballmer, after the Surface and Windows Phone 8 go down for the count.

Richard said...

Marius Kloppers - BHP

Duck Ju said...

80% of Chinese SOEs' CEOs

Ezekiel said...

Hamish Tyrwhitt - Leighton Holdings
Frank Stieler - Hochtief
Florention Perez - ACS

All three are running out of cash.

ECG said...

Ballmer, no doubt. Zune, Vista, Surface, windows 8. Too many misses and execution problems. Poor vision and weak leadership . He won't last 18 months. 12 tops.

Mitch C said...

Ron Johnson at JCPenney. His strategy doesn't fit the stores demographic and is before its time.

dede said...

Henri Proglio (EDF:FP, market cap 30GEUR)

This guy is the quintessential French capitalism (sic) CEO, having made a career at Generale des Eaux (now Vivendi/Veolia) which moat was (is) bribery.
He just lost a political boardroom battle at Veolia and was placed at EDF by Nicolas Sarkozy : he should be on the top list of CEOs the French government wants to kill.
Given EDF nuclear park and the absence of major incident to date, a serious nuclear accident could be the trigger.

The latter being far from sure within the next 18 months, I would not short EDF now though...
Other option for him to fall, the mess at the new EPR nuclear plant at Flamanville which was supposed to start in 2012 and is now planned for 2016.

Anonymous said...

Sounds like you are looking for a CEO with pecadillos and a board that's not supportive. Not a gossip monger, so I'll go for performance alone.

Larry Page, GOOG. Advertising revenue will decline for reasons of competition (FB <- who suck themselves), decreasing effectiveness of other properties (see GOOG's ability to monetize blogs like this among their many other properties) and an inability to deal with the sinkhole that's Motorola.

Stephen Elop - obvious reasons

already mentioned:
Steve Ballmer (should have happened years ago)
M. Mayer (more because Yahoo is in an intractable position)

najdorf said...

Kenneth Frazier at Merck. The company hasn't had a decent new product in years, overpaid for Schering-Plough, continues to spend heavily on R&D; he will be blamed as revenues drop off even though prior management laid the groundwork. They will bring in a Mark Hurd type to slash costs and preside over the next phase of the decline into irrelevance. See also Pfizer, one step further along the same path, and JNJ, where Weldon is probably gone after the next screw-up.

Anonymous said...

On a Negative Free Cash Flow : Rogue Trading Losses basis, JIM CROWE, the CEO of LVLT, leads the combined efforts of Nick Leeson, Jerome Kerviel, Kweko Aduboli, Chen Jiulin, Toshihide Iguchi, and Yasuo Hamanake by about $330mm and he is not finished yet... (big number -13.7bn)
LVLT is a 4% ROIC business (was <1% before the decided to take the useful life of their fiber assets from 25 to 50 years) with a 7.5% WACD. That is on $8.4bn of debt.
From a synergy perspective they are doing their miracle acquisition GLBC, but unfortunately most of their future EBITDA growth will be coming from unwinding the cookie jar litigation accrual established when they paid three times what GLBC was worth.

I like my chances, what is the prize again?

REEFER(endum) 502 said...

Bill Doyle of POT(ash). We are tired of the arrogant Yank. He worse than Rosenstein of Jana when it comes to the know it all department.

Wexboy said...

John,

I guess I'd have to nominate Dov Charney, the CEO of American Apparel Inc. (APP:US)!

Due to the 'f***ing awful' (as I'm sure he'd phrase it) share price performance - but mostly due to the next/inevitable lawsuit that hits...

Then again, I'm probably just plain wrong - if he can survive this lawsuit, he can survive anything:

http://www.nypost.com/p/news/local/american_apparel_founder_turned_sh6u5Ij8RCqftvW5dsuLsN

Cheers,

Wexboy


Anonymous said...

Does the Balmner getting sacked over Windows 8 really make sense?

It's been my impression that sinofsky not Ballmer will get the credit/blame for Windows 8. Who else is a near term heir apparent? No board is going to just sack Ballmer tomorrow and bring in an outsider. So the only way he leaves is if Windows 8 succeeds which might play out but doesn't sound like the logic people have been suggesting.

Anonymous said...

David Robb, Iluka.

Attempting to 'manage' zircon and (to a lesser extent) titanium dioxide markets is driving substitution and so will fail, possibly spectacularly.

Shareholders will wear thin of his evangelism.

Anonymous said...

OK, I'll play along ...

Tim Cook of AAPL - because he has a bunch of investors riding a speculative bubble and they will not be pleased when they realize he can't bullshit as well as the former CEO.

creditplumber said...

Simple. Ian King, CEO of BAE Systems. Disastrous strategy for its survival after failed merger talks with EADS. Unsupported by terrible strategic positioning by UK PM Cameron after vetoing EU Treaty last year. Why did the Germans need to concede an inch?

creditplumber said...

(resending: not sure whether it came through first time).

Ian King of BAE Systems. Disastrous (non)-execution of life or death survival strategy after failure of negotiations with French and German governments over proposed merger with EADS. Ably assisted by UK PM Cameron preparing the quicksand with his "veto" of EU treaty in 2011. That really built German support. And why should they? They were given no reason to negotiate.

David Lane said...

Tim Cook, Apple Inc.

Apple is slowly deviating from Steve Jobs' vision. Margins will start to get squeezed from wage pressures and increased competition. Why isn't more of the company's cash being used for increasing share holder value? This is a long shot by most standards but investors will start to ask questions about Tim and his vision for the company.

Anonymous said...

Heins

RIM will be sold.

tastychicken said...

Gold mining industry cost controls have been absolutely abysmal combined with poor acquisitions. The main companies I would've suggested already sacked their CEOs. I'll go with IAMGold's Stephen Letwin just based on cash costs skyrocketing.

abbVie (pharma Abbott spin-off EOY) Richard Gonzalez. ABT CEO going to devices company and sacking pharma company with debt. He apparently didn't graduate from University of Houston in biochem or get a master's at U Miami... I'll give credit to company for being proactive about correcting it.

If I were to go consensus it would be something like BBY, HPQ, MSFT, and then PG in that order. CSCO CEO said he'd most likely step down in a couple years anyways...

Anonymous said...

Virginia Rommetty IBM. Palmisano used up most of the accounting tricks. Gets harder from here to grow earnings at 12% with no rev growth.

Nemo Incognito said...

Simon Scott, Lonmin. Aquarius Platinum and Anglo already done. I know a good trend when I see one.

Shawn said...

that shit head -- Stephen Elop of Nokia. I saw Nokia bust coming when he drop Symbian for Microsoft OS.

Typical small brain guy who grew up under Microsoft and can only think/eat/sleep Microsoft products.

Since when Microsoft product come out with perfect product in 1st generations? To bank your whole company on non-tested/non-existent Microsoft mobile OS was truly reckless bet.

And the small brain got paid 10s of millions for driving to ground a good company loaded with patents. Incompetency at its height.

Anonymous said...

Paul Otellini at Intel. His mismanagement on mobile product development, should, and will cost him his job.

Anonymous said...

In your own backyard: Katie Page at Harvey Norman. House of cards.

Hiigaran said...

This is super fun I should write up my thoughts on Microsoft (although I don't think they will be as popular as the "Steve Ballmer is going to get fired hands down" prediticon).

tbconger said...

ADM: Patty Woertz
poor capital allocation, lagging stock and (what can i say) its been a tough couple of year for the ladies

Anonymous said...

Sandra Cochran from Cracker Barrel (CBRL).

Sardar Biglari, of Biglari Holdings (BH), is trying to get two board seats (out of 10) in a current proxy fight. If Biglari wins, he will get better insight into just how much shareholder value Ms. Cochran has destroyed thus far, and Biglari will call for her resignation.

Anonymous said...

ADM: Patty Woertz
poor capital allocation, lagging stock and (what can i say) its been a tough couple of year for the ladies

Anonymous said...

Stuart Gulliver - HSBC. He was head of the investment bank during the libor-manipulation era and the guy can't give a speech without looking into his notecards.

Anonymous said...

Overseas shipholding group. - Arntzen. They need to be restructured

Bank of America - Moynihan it is not only too big to fail it is to big to manage. All the quality people are leaving and he is left holding the bag. It will be broken up by markets not by government.

Absalon said...

I predict that IF Romney wins the US Presidency, Bernanke will, before the end of December 2012, publicly offer his resignation. Romney will then either have to accept the resignation (probably with an effective date in March 2013) or publicly endorse Bernanke for the duration of Bernanke's term. If Bernanke does not do this he will be a whipping boy for Romney and the Republicans will make Bernanke's life a misery. Faced with the offer of a resignation, Romney will probably be forced to endorse Bernanke.

Does Bernanke qualify for your little pool?

Anonymous said...

Larry Blanford at Green Mountain Coffee. Einhorn was right, FBI & SEC raid their off balance sheet channel stuffing subsidiary, etc.

Ezekiel said...

Florentino Perez - ACS
Frank Stieler - Hochtief
Hamish Tyrwhitt - Leighton Holdings

All three will run out of cash on 31 March 2013

Modernist said...

Sheldon Adelson will step down in disgrace from his position as CEO of LVS (40BB company) as a result of his conservative social views interfering with professional judgement in the context of online gambling.

But you can give me the job now.

Aharon L said...

Michael Duke at Wal-Mart. The Mexican bribery scandal/cover up was just a blip when it was first revealed, but the internal and external investigations are not fully closed and will drive further headlines. Effective family control will hasten his departure, since he can't really fight a proxy or PR battle with the Waltons.

PSC said...

It's a shame you're posting this today. Last year this was a doodle - poorly performing CEOs in finance like Pandit, Frazier, etc. these kind of people were everywhere. Now ypu've got to think.

Nemo Incognito said...

Lloyd Blankfein. With no role in Libor and a few good quarters in he can walk away without looking like he was pushed.

Clownbucks said...

i nominate Ellen Kullman from Dupont. DuPont has underperformed under her helm and failed to benefit like DuPonts competitors from cheap input cost. The Danisco acquisition was very expensive and has stretched DuPonts balance sheet. The recent earnings warnings revealed her operational shortcomings as it must have been clear for a while that Solar and TiO2 are weak.

My Long shot is Jeff Immelt. He apparently tries to expand GE Capital again, via ill designed acquisitions of MET' bank subsidy and even looking at HCBK. Seems to make no sense to me and once GE Finance will be declared a systemically important institution, this will prove again an anchor for GE.

Mokwit said...

Peter Clarke at MAN Group Reasons to follow

As said...

Marchionne at fiat/chrysler, poisonous atmosphere and driving peole into the ground. Can't recognise a good car design to save his life and once Chrsyler runs out of frsh product, i.e. Designed before he arrived, it will go the way of fiat.

Anonymous said...

Kevin thompson at solarwinds.

Before starting solarwinds, kevin thompson was CFO at Red hat and left in a hurry during 2004. Details are in the law suit: securities.stanford.edu/1031/...01/200556_r01c_04CV473.pdf

Improper revenue accounting, Acquisitions just to boost revenue etc. etc.
Same stuff continues at Solarwinds. BTW, the name of the company itself is a give-away: it has nothing to do with Solar Energy.

Look at the number of acquisitions they have done recently and corresponding charge for goodwill.

Typically engineering companies do the acquisitions for talent i.e. they want the employees to join and stay.

Here is Kevin T. talking about his acquisitions on latest quarterly con call.


"
I think based on the type of acquisitions we've been doing, which have been very small. In some cases, we literally have kept no employees. In other cases, like the Web Help Desk, we're going to keep less than a handful of employees. If we continue to find companies like that, and that tends to be what we find if we're looking for easy-to-use products that have great architecture, that we can just slipstream into our model, then I think we can do an acquisition a quarter because it really -- not that there's no integration effort, but we've gotten pretty good at. "


At a price-sales ratio of 15x, they have to keep the show going till they sell out!

Anonymous said...

Barack Obama: The Ultimate Imposter. Foolded millions and is still fooling some of the same naive fools

Ryan H said...

Anonymous said...
Paul Otellini at Intel. His mismanagement on mobile product development, should, and will cost him his job.

October 27, 2012 1:31 AM


This was my comment, and in light of today's news, I think it's fair to say that I am winning this game so far. I had to come back to claim credit after I saw that Otellini was out.

I know my entry was only a sentence long, but it really only takes a sentence to sum up what the problem is with Intel. I’m banking on bonus points since Intel is a $100B company and the CEO was well-respected with 8 years of tenure. Though I expect I’ll probably lose points for the lack of drama. All in all, it was fun to see my entry be proven correct so quickly!

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.