The best chief executive officers (CEOs) in the world typically aren't the flashiest ones. While they aren't always making big headlines, they think beyond tomorrow's share prices or the next earnings call. Here are seven top CEOs long-term investors should watch as they build great businesses that will be worth holding for decades.
1. Dr. Lisa Su, AMD
Advanced Micro Devices (NASDAQ:AMD) seemed destined for bankruptcy in late 2014, when Dr. Lisa Su became chief executive officer. As of December 2020, AMD's share price is about 30 times what it was when she took command of the semiconductor manufacturer. Su, who has a PhD in electrical engineering from Massachusetts Institute of Technology, led the remarkable turnaround by zeroing in on what the company did well: making central processing units (CPUs) for computers and servers. She also diversified the business to focus on chips for gaming consoles and data centers, both of which have been lucrative bets during the pandemic. Just as important, though, were Su's decisions about what not to focus on: developing chips for smartphones and tablets, even though the rest of the industry believed mobile was the next big thing.
Although another 30-fold share price increase probably isn't in the cards for the semiconductor stock, long-term investors should pay attention to Su. AMD recently announced its first major acquisition under Su's leadership -- that of fellow semiconductor manufacturer Xilinx (NASDAQ:XLNX) -- a move AMD says will push its total addressable market to $110 billion.
2. Corie Barry, Best Buy
CEO Corie Barry's decision to voluntarily close all Best Buy (NYSE:BBY) stores nationwide due to COVID-19 could have been a disaster for the retailer. But Barry's quick decision making helped the company maintain sales at 81% compared to the same six-week period in 2019 -- while not a single customer shopped in brick-and-mortar stores. Barry held about 15 positions at Best Buy before becoming CEO less than a year before the pandemic. She oversaw the rapid shift to curbside pickup that helped the company stay competitive, even at a disadvantage, against rivals like Walmart (NYSE:WMT), where customers had already been stocking up on essentials. In late April she unveiled an appointment-only model to draw customers back to stores.
Barry isn't longing for a shift back to pre-COVID shopping habits, though. She believes shoppers' new habits are here to stay, and made the once-unthinkable move of remodeling stores right before the holiday rush to accommodate demand for same-day delivery and in-store pickup. Barry's willingness to take quick action makes her a CEO to watch long after the pandemic.
3. Marvin Ellison, Lowe's
On his first day as CEO of Lowe's (NYSE:LOW) in 2018, Marvin Ellison skipped the welcome celebrations. Instead he headed straight to the contractor's desk in a store to better understand pain points for customers. In February, Ellison told CNBC about another customer pain point, describing the company's website as so "clunky" that "you may not get the whole way to checkout." Ellison's push to improve e-commerce paid off, with online comp sales up 135% in Q2 2020. Although home-improvement chains in general have been big winners as people spend more time at home, Lowe's is making big gains against rival Home Depot (NYSE:HD) -- which just so happens to be Ellison's former employer. Lowe's share price ended 2020 up 157% from March lows, compared to 96% for Home Depot.
4. Mary Barra, General Motors
General Motors (NYSE:GM) isn't the electric-vehicle maker the world is talking about. But anyone who believes the future of cars will be fuel-free should pay close attention to CEO Mary Barra's plans for GM. Although GM backed away from a deal with the troubled Nikola (NASDAQ:NKLA) in November 2020, Barra is pushing forward with an ambitious plan to pump $27 billion into electric vehicles in the next five years.
Investors should pay attention, because Barra, an electrical engineer who joined GM in 1980 as an 18-year-old intern, doesn't have a track record of blowing cash on the next big thing. Upon becoming GM's top executive in 2014, Barra started streamlining. She eliminated underperforming vehicles and pulled out of unprofitable markets, including Europe and India. Her cost consciousness is part of why GM shattered analysts' projections for Q3 of 2020 in spite of COVID-19.
5. Satya Nadella, Microsoft
In Satya Nadella's first five years as CEO, Microsoft's (NASDAQ:MSFT) market cap smashed the $1 trillion ceiling. One of the key drivers of Nadella's success was making Microsoft's then-fledgling cloud services the core of the business and eventually ditching plans for a Windows smartphone. The company has delivered for investors under Nadella, with share prices increasing more than fivefold under his leadership.
He's also accomplished the feat of overhauling Microsoft's notoriously cutthroat culture, which often resulted in employees competing rather than collaborating. When he first became CEO in 2014, he challenged employees to become "learn-it-alls" rather than "know-it-alls." But while Nadella has been widely praised for turning around Microsoft's culture, he's careful not to take too much credit. "From ancient Greece to modern Silicon Valley, the only thing that gets in the way of continued success and relevance, and impact, is hubris," he told The Los Angeles Times in 2019.
6. Katrina Lake, Stitch Fix
In 2017, Stitch Fix (NASDAQ:SFIX) CEO Katrina Lake became, at 34, the youngest woman in history to take a private company public. Lake has led the charge in pioneering innovative ways to personalize style. Stitch Fix uses the company's 5,600 stylists and various algorithms to predict what items clients will like -- and about 80% of new customers buy at least one item from their first "Fix," or shipment. Stitch Fix shares soared 160% during 2020. While some critics say the company is just another winner in the shop-at-home craze, long-term investors should pay attention to Lake's vision for personalizing the way people shop for clothes.
7. Warren Buffett, Berkshire Hathaway
Of course, no list of CEOs to watch for long-term investing would be complete without Uncle Warren. Although Buffett appears to be letting investment managers Ted Weschler and Todd Combs make a lot of Berkshire Hathaway's (NYSE:BRK-A) (NYSE:BRK-B) stock picks these days, investors everywhere still scour the company's 10-K filings for the latest "Buffett stocks" and cling to Buffett's famed words of wisdom.
Regardless of whether Buffett personally agrees with every one of Weschler and Combs' picks, you can bet he holds them to the highest of standards. "Lose money for the firm, and I will be understanding," he's said. "Lose a shred of reputation for the firm, and I will be ruthless."