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Is Paula Deen Back? The Investing Lessons of Comeback CEOs


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Not even three months since explosive allegations of racial insensitivity torpedoed her TV deal with the Food Network, celebrity chef Paula Deen is back to wowing crowds. She played to a full audience Saturday at a cooking conference at Dallas’ Kay Bailey Hutchison Convention Center.

We’ve seen this before. Comeback CEOs are as American as apple pie, and just as tasty for investors. Look at the late Steve Jobs, who returned to Apple (Nasdaq: AAPL) after 12 years away and brought with him a 100-bagger for outside shareholders.

The following slideshow looks at three other CEOs to stage successful comebacks, and what makes for a winning formula when it comes to investing in a leader.

Published in: Business, Economy & Finance
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Is Paula Deen Back? The Investing Lessons of Comeback CEOs

  1. 1. Is Paula Deen Back? The Investing Lessons of Comeback CEOs
  2. 2. Deen Triumphant? Fans and authorities helping to rebuild the celebrity chef’s reputation. ● Thomas George Paculis sentenced to two years in federal prison for attempting to extort $200,000 from Deen. ● Over the weekend, she drew a large crowd of cheering fans at a Dallas cooking show. ● Similarly, a recent L.A. Times poll found that 92% surveyed say they want Deen back on TV. Photo: J. Pat Carter, AP. Don’t be surprised if she’s back on the air within months. After all, we’ve seen this pattern before ...
  3. 3. The Importance of Founders Source: Macworld. Ousted or retired founders can be a powerful catalyst when they return. Steve Jobs might be the textbook case. After 12 years away, Jobs returned to Apple and led numerous breakthroughs. His record of delivering for shareholders is virtually unparalleled. Jobs isn’t the only success story, though. Comebacks are more likely to succeed when it’s a founder leading the charge ...
  4. 4. John Mackey Source: WHAT HAPPENED The situation: In July 2007, Mackey admitted that he had been using an anonymous handle (i.e.,“Rahodeb”) to defend his company’s stock on Yahoo! Finance message boards. The revelation came as Whole Foods was attempting to navigate FTC questions about a proposed deal to acquire competitor Wild Oats. How he handled it: Initially, Mackey defended his actions. Whole Foods would later update its Code of Conduct to prevent just such activity by any of executives in the future. Mackey would also stop blogging at the company site. His record since: He’d go back online in May 2008, after the stock suffered a 30% haircut. In 2009, he co- published his first book about conscious capitalism. All told, Whole Foods shares have quadrupled since Mackey left Rahodeb to history’s dustbin.
  5. 5. Howard Schultz Source: WHAT HAPPENED The situation: Schultz decided to step aside for a new CEO in 2000, after 13 years at the helm. How he handled it: He remained out of the executive suite for eight years. Orin Smith and Jim Donald both took tries at the post but growth would ultimately stall. Indeed, in fiscal 2007, revenue growth slowed to just 10.3% and net income fell a breathtaking 53%. Schultz would return as President and CEO in January 2008. His record since: In that time, his team has introduced a broader menu, “skinny” drinks, the VIA brewing system, and a blossoming partnership with one-time rival Green Mountain Coffee Roasters. The stock has more than tripled since his return.
  6. 6. Charles Schwab Source: Wikimedia Foundation. WHAT HAPPENED The situation: Founded the discount broker Charles Schwab Corp. in 1974 and remained as Chairman and co-CEO through Sept. 11, 2001, at which point he stepped aside for David Pottruck. How he handled it: Schwab’s company did poorly in his absence as revenue declined during both years of Pottruck’s two-year reign. Net profit fell 45% in 2002. The board would ask Schwab to return in 2004 and he’s been Chairman ever since. Walter Bettinger has been CEO since Oct. 2008. His record since: Schwab has overseen 7 years of revenue growth in the 9 years since his return. The stock is up more than 80% during that period, versus about a 60% gain for the S&P 500.
  7. 7. Invest With Those Who Are Invested The winning formula? Founders who are also company leaders and significant shareholders: ● Tesla Motors. CEO and founder Elon Musk still owns 23% of the shares outstanding. ● CEO and founder Marc Benioff still owns about 7% of the business. ● Berkshire Hathaway. CEO and founder Warren Buffett still owns more than 20% of the shares outstanding. Market position and superior products also huge factors. But in general, founder owners are more likely to deliver for outside shareholders!
  8. 8. Invaluable Advice From a Great Leader Wouldn’t you ask Warren Buffett for investing advice if you could? Of course you would! Fortunately, you don’t need a personal audience with the Oracle to benefit from his wisdom. Our newest special report includes a roundup of Buffett’s best advice, including ... ● How to think about risk in hot markets like the one we’re in now. ● Why cheap stocks aren’t always the best buys. ● The ideal holding period for any stock. Want even more tips? Our analyst’s report has all you need and more. Click here to claim your FREE copy now.