The Chicks' 12 Steps to Picking a Stock

STEP 11  Strong Management & Operating History

Note: This article focuses on Step 11 of the Chicks' Dozen. For articles focusing on other Steps, see the links listed at the bottom of the page.

Last January the Chicks all gathered for poolside* meetings in Scottsdale, Arizona. One of our tasks was to give presentations on the CEO’s of our respective companies. It was enlightening, to say the least. Some people really went all out and were entertaining, informative, and thorough. There was one presenter (I won’t name names, but rhymes with "toolie") who so hates to be the center of attention that she huffed and puffed and rolled her eyes until she was pelted repeatedly by small objects. But regardless of the obvious trepidation (hers was truly one of the best!), it was hard not to be intrigued by many of these leaders, their interesting backgrounds and success stories.

I can remember taking business classes in college and learning about the different leadership styles. I’m quite certain on this January day under the hot, dry desert sun we were able to run the gamut on the various styles. To keep things simple sistah, I thought I’d take a couple of the key CEO’s from that memorable afternoon and elaborate on their history, success, and dynamics. My goal is to show you how the character, consistency, dedication and drive exuded by the management is conveyed throughout the company and directly correlated to that company’s success.

Sun Microsystems (SUNW-Nasdaq)

Industry:Technology • Sector:Computer Hardware • CEO: Scott McNealy.

Sun was Head Hen Karin’s company to research. (As per usual, she was relaxed, looking very Hollywood in her dark sunglasses.) She explained about her "obvious" connection with McNealy: (1) He likes hockey. (2) He likes beer.

She was hooked. But actually there’s a lot more to this guy than just sports channels and Coors Light. Turns out that while he is considered a pretty regular guy, he obviously knew he had to throw a little academia into his plans. So he went to Prep School (again, opting for pranks and athletics over academics) and eventually headed to Stanford with his eye on manufacturing. Apparently he was quite the visionary; to his credit it was his manufacturing expertise that put Sun over the top. He is known for being a workaholic, but also for being charismatic and able to rally the troops in a single speech.

The history of Sun also speaks to McNealy’s abilities. One of my favorite places to check out a company’s performance over time is at the Fool. Here, you can satisfy your curiosity at-a-glance. Quick, check it out here and hurry back…

Looks pretty, doesn’t it?

McNealy has also earned the respect of other corporate giants such as Oracle’s Larry Ellison. "There are two things I think about Scott,'' says Ellison. "One is passionate leadership, and the other is his rigorous financial management. And that's uncommon to find in one person. Usually, the financial guys aren't so outspokenly passionate, and all leaders are not detail-oriented.'' (BusinessWeek, 1/22/96)

And he drinks beer? Don'tcha just want to have him over for dinner? (Karin, check into making him an honorary Chick at the next Habitat Women Build, will ya?)

America Online (AOL/NYSE)

Industry: Technology • Sector: Computer Services • CEO: Steve Case

With a lack of writing space (you can never win, ya know, either they’re squawking about too little or they’re squawking about too much…) I thought I’d remind you to check out the material from Monday’s article on AOL. Again, another driven executive with a personality. A grinder with a vision. A singer, with a Hawaiian shirt. (Karin, book him for the next Chicks meeting.)

Oh, and don’t forget to check out AOL's Growth Rates at the Fool.

In a nutshell, knowing a company’s CEO and its history has a direct correlation to the company’s growth and stability. As Chicks, we make it a priority to research these people. It goes back to our philosophy about Buying What Ya Know. We have to know them inside and out, top to bottom. We need to feel warm and fuzzy about these companies. That may not always happen (just ask Chick Toolie about MSFT). If we don’t get a good feeling, we don’t have to buy the stock.

Getting to know the company’s CEO is getting to know the company. It helps in understanding a business's growth from the top down. It’s feeling warm and fuzzy from the inside out. From the Gross Margins to the CEO, you like this company. If that doesn’t convince you, it sure makes for a great poolside show.*

*Disclaimer: To all of our husbands and significant others: the reference to poolside meetings is not a reflection of these meetings actually being laid back, relaxing and fun.