Is Buckle's Management Up to the Task?

Big investors like Warren Buffett have the clout, time, and resources to evaluate a potential investment's management face to face. You may not have quite such a mighty address book, but that shouldn't stop you from assessing the people in the executive suites.

When sizing up management's mettle, I always start with two simple measures: ownership and returns on invested capital. I want to know whether management has skin in the game, aligning its interests with mine. And I want to learn how well executives have allocated shareholders' hard-earned capital. If management owns a significant stake in the company and can generate value-creating returns on invested capital, I call that a win-win!

Recently, Buckle (NYSE: BKE  ) and its management team caught my eye. The table below will tell you why:

Company	Insider Ownership	ROIC
Buckle	43.9%	46%
Stein Mart (Nasdaq: SMRT  )	6.8%	17.2%
Hot Topic (Nasdaq: HOTT  )	1.6%	5.6%

Source: Capital IQ, a division of Standard & Poor's, and author's calculations.

Insiders own 44% of the shares outstanding, and returns on invested capital have consistently exceeded 15%. Since the cost of capital for most companies is between 8% and 12%, depending on their capital structure, Buckle is creating value for its shareholders.

Studies also show that competition erodes returns over time. Yet Buckle has generated those impressive returns while vying with Stein Mart and Hot Topic and a number of other rivals in the retail space. That impressive achievement suggests that management knows what it's doing.

Good execs? Check!
From the data above, it certainly looks like Buckle's management has been creating value for its shareholders. Given its top-notch leadership, I'd suggest you give Buckle a spot on your watch list.