What if you drove past Starbucks
Fortunately for shareholders, the Starbucks chairman has remained passionate about the company for decades, and the stock has returned 4,900% since the company's public debut in 1992.
All CEOs champion their business in press releases and analyst meetings when they are on the clock -- it's their job. But investors looking to crush the market need to seek out those leaders that make the success of the company their life's passion.
It's no secret that there's a correlation between companies led by founders or committed CEOs and incredible stock returns. Call it the "founder effect," call it motivation, call it whatever you want. The bottom line is that management committed to the success of the company shows it by owning a significant portion of the business and by hanging around a long time, often decades.
Need a few examples? How about Bio-Rad Laboratories
A similar familial handover recently took place at Qualcomm
Robert Stiller founded Green Mountain Coffee Roasters
Sticking it out
Particularly with successful small-cap companies, being bought out by a larger conglomerate is fairly common. But invested insiders with long tenures tend to be less likely to sell off their company too early if they see long-term promise. They turn down offers because they know that barreling ahead on the current plan is far more lucrative -- for themselves and investors alike.
What if Coca-Cola
Or what if Garmin
Show me the money
Everyday investors put money behind companies with little evidence that the leadership shares any passion for the business. Or worse, they invest in companies clearly demonstrating that executive interests are not aligned with those of shareholders. With thousands of stocks to choose from, no investor needs to take such risks.
At Motley Fool Hidden Gems, we consider executive tenure and insider ownership a pivotal factor when recommending investments. We also like to see founders in leadership roles, because founders tend to be keenly aware of the opportunities for growth and also attract highly motivated employees.
The results speak for themselves: Hidden Gems recommendations are up 33% versus the S&P's gain of 14% over more than three years. Add some passionate small caps to your portfolio -- click here for a no-obligation 30-day trial to Hidden Gems, and see which companies lead analysts Tom Gardner and Bill Mann are mouthing off about now.
Fool contributor Dave Mock mouths off all the time. He owns shares of Starbucks, Coca Cola, Qualcomm, and Garmin. The longtime Fool is also the author of The Qualcomm Equation . Garmin and Starbucks are Motley Fool Stock Advisor recommendations. Coca-Cola in an Inside Value recommendation. The Motley Fool has adisclosure policy.