Do you watch Shark Tank, the show that replicates a tricycle version of what real venture capital is like? Well, on Shark Tank, the investors (or “sharks”, as they are called) are always talking about investing in people. By that, they mean they are investing in entrepreneurs who they know will succeed because of their personality, drive, skills, intellect and/or passion.
That is easy to do in venture capital. But, it is much more difficult to do in the public markets. After all, it isn’t everyday that you are rubbing elbows with a Fortune 500 CEO.
So how do you determine who are the best CEOs in the stock market?
Look at their track record. See what they’ve done. See what they’ve said. And, most importantly, see how their stock has done while they’ve been at the helm.
With that in mind, here’s a list of five of the best CEOs in the stock market, as determined by compounded annual average return in their company’s stock price while they’ve been the boss.
Best CEOs by Stock Market Returns: Mark Zuckerberg, Facebook (FB)
Compounded Annual Returns: ~32%
Social media giant Facebook (NASDAQ:FB) went public on Wall Street at $38-per-share in May 2012. Fast-forward six years and two months, and Facebook stock trades around $210 today. At the helm the whole time was founder and CEO Mark Zuckerberg.
That means that under Zuckerberg’s tenure as CEO, Facebook stock has seen its public value grow by over 30% per year. That is an impressive clip.
But, it shouldn’t be any surprise. Zuckerberg is the boy-genius founder of Facebook, turned corporate-leader of one of the world’s most dominant companies. He is constantly working to improve the products within Facebook’s ecosystem (Marketplace and Workplace), looking for strategic acquisitions (WhatsApp and Instagram), studying new technology (cryptocurrencies) and rolling out features which, even if he didn’t invent them, his platforms implement best (Stories).
Thus, so long as Zuckerberg remains at the helm of the Facebook growth machine, this stock should continue to produce in excess of 30% returns per year.
Best CEOs by Stock Market Returns: Reed Hastings, Netflix (NFLX)
Compounded Annual Returns: ~47%
There is the famous story of Netflix (NASDAQ:NFLX) founder and CEO Reed Hastings sitting in a hot tub with a friend in Santa Cruz in 2012 when Hastings shared with his friend that he was considering splitting the DVD and streaming business of Netflix. His friend told him it was a bad idea. And, initially, it was.
But, Hastings’ idea proved to be revolutionary. Over the next several years, streaming became the hottest trend. And Netflix, with the biggest streaming platform in the world, became the hottest company.
Then, everyone started to question Hastings again when the company decided to invest best in original content in 2015. But, over the past several years, original content has become the hottest trend in streaming. And Netflix, with the biggest original content portfolio, has once again become the hottest company.
In other words, Hastings always seems to be on the frontier of what is coming next in the entertainment industry. That is why NFLX stock has risen by nearly 50%-per-year under his tenure.
These big gains should continue so long as Hastings and Netflix continue to be the innovators in the dynamic entertainment industry.
Best CEOs by Stock Market Returns: Satya Nadella, Microsoft (MSFT)
Compounded Annual Returns: ~31%
In the first half of this decade, Microsoft (NASDAQ:MSFT) looked like an antiquated technology company with its feet stuck in cement. Innovation wasn’t happening. Growth wasn’t there. And MSFT stock was stuck in neutral.
Then, Satya Nadella came along. He took over as CEO in February of 2014, when the stock price was just a hair above $32. Since then, MSFT stock has soared to all-time highs of right around $107, implying compounded annual returns in excess of 30%.
How did Nadella do it? He focused on the cloud.
Microsoft had a bunch of valuable assets like Microsoft Office. They were just being distributed the old-school way via disks and chunky installation packages. So, Nadella took all those assets, moved them to the cloud, and created cloud-hosted software services.
That transition has played out beautifully. Now, revenue growth and margin growth are accelerating higher and Microsoft’s future looks brighter than it arguably ever has.
So long as Nadella continues to push cloud innovation through Microsoft’s huge business, then MSFT stock should be a lock for solid long-term gains through global cloud market expansion.
Best CEOs by Stock Market Returns: Jeff Bezos, Amazon (AMZN)
Compounded Annual Returns: ~43%
Jeff Bezos didn’t become the richest man on the planet by accident. He did so by pioneering a new way of commerce, and in so doing, propelled Amazon (NASDAQ:AMZN) from a $300 million start-up in 1997 to an $880 billion global retail and cloud powerhouse today.
Bezos did that by being ruthless along the way (interestingly enough, ruthless.com directs to Amazon.com). He was ruthless on pricing, cutting prices on Amazon to near break-even so as to out-price competitors. He was ruthless on perks, throwing in things like free shipping so as to one up the competition. And he was ruthless on market expansion, buying giant enterprises like Whole Foods and attempting to disrupt the grocery market right after disrupting the mall retail market.
As a result of this ruthless growth strategy, Bezos has led Amazon to being the world leader in the booming e-commerce and cloud markets. Both of these markets have a lot of firepower left. Plus, Bezos will likely be just as ruthless in dominating the pharmacy, logistics, and cosmetics markets, too.
All together, this is a big growth company with a big growth oriented leader who has a great track record of success. Thus, if you are looking for a strong stock with a strong CEO, there aren’t many out there that the fit the bill quite like AMZN.
Best CEOs by Stock Market Returns: Elon Musk, Tesla (TSLA)
Compounded Annual Returns: ~43%
He may be controversial, and he may rub you the wrong way on social media. But, you can’t argue with results when it comes to Tesla (NASDAQ:TSLA) founder and CEO Elon Musk.
Tesla went public at $17-per-share in June 2010 as a nascent electric vehicle company with big aspirations. Today, eight years and a month later, Tesla stock trades above $300-per-share, and is widely considered to be the world’s leading and premiere electric vehicle company. Those are impressive leaps and bounds, and they happened in such a short amount of time and despite frequent interruptions from Musk’s Twitter (NYSE:TWTR) feed.
Going forward, I think the best way to look at Musk is a mad genius. He does some mad things. But, he’s also a genius creating the future of transportation and energy. As an investor, it is best to forget the mad part. Focus on the genius part. That is the only part that shows up in financial statements.
TSLA stock has been under hot water recently due to Model 3 production ramp issues and credit concerns. But, in the big picture, these risks are over-stated. Longer-term, Model 3 production will ramp, credit concerns will disappear, and this company will emerge as the leader in what will inevitably be a massive electric vehicle market.
As of this writing, Luke Lango was long FB, AMZN, and TSLA.