Founder-led Stocks?

Saul and co.

I know this isn’t a metric outlined as a requirement in the KB (based off memory), but I’ve noticed multiple founder-led companies in Saul’s portfolio. In looking back at my own performance, founder-led stocks have badly beaten non founder led and I think there is some academic research showing a correlation to out performance.

Question is, is this something you consider at all in your investments or portfolio allocation?

Thanks!

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A lot of the companies popular here are pretty young, and so more likely to still be led by their founders.

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Great point Ed, this makes me wonder, do Founder-led stocks tend to out perform because they founders being involved generate outperformance or is it more correlated with their age and the fact that younger companies tend to grow more explosively. Hmm…

  • Austin

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I think the two categories are related. You also implied the question of what happens if an older company keeps its founder(s) running it. Google/Alphabet is an example of a company that kept its founders for quite a while while continuing to grow quite a lot. Do we have an example of a company that grew well under its original founder, but reached a point where it was a good idea to replace him (her)?

Apple is an unusual example, where the company floundered when the founder was ousted, and revived when he returned.

There’s also the whole thing of people leaving a bigger company to start a new one. Arista is a recent example. (Intel is part of a major historical example. Was it Fairchild Semiconductor that was the source of people who founded lots of companies in related fields, especially computer hardware?)

You also have “messiah” and “false messiah” CEO’s who are hired to “save” companies. John Chen at Blackberry is one example. He revived Sybase quite a while back, and now he’s working on Blackberry. “Chainsaw” Al Dunlap was supposed to rescue Sunbeam, and you might remember how that turned out eventually. The guy who was running Apple’s retail area nearly killed JC Penney as CEO when he tried to transform it into something more Apple Store-like.

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