Nobody likes it when our business icons die, whether by accident or naturally. But what happens when an iconic CEO suddenly passes?
If history is any guide, you buy the dip if you're lucky to get one and hold on, as you will likely be rewarded.
This becomes an unlikely wealth creator, in many cases. The ideal person may have left, but the legacy (company) remains. The future may be more certain than others would believe.
Recently, the CEO of CSX Corporation (CSX) Hunter Harrison passed away, subsequently the stock was hammered. The executive had only been with the company for a short while, and rumors of his poor health came along with him after leaving his post at CPR to become the head of CSX in January 2017.
While not too unexpected, investors worried about the future of CSX, and that took the stock to breakout levels from a month ago.
It was a shocking move, but since then the stock has rallied nearly 20% to reach all-time highs. Could investors be that convinced a new plan is in place, or did they just panic on the news? Probably the latter.
Many investors get complacent when they finally invest in a company that has an icon at the helm. Many remember the day in October 2011 when Action Alerts PLUS charity portfolio holding Apple (AAPL) founder Steve Jobs finally passed after a lengthy battle with pancreatic cancer.
Investors hastily cut the stock; the following day saw a 20% plunge in Apple. The smart investors stepped in and picked up the stock as a great opportunity.
After a successful campaign with the iPod, iPhone and iPad, what would be next? If the genius behind these products was now gone forever, what would we all do?
If you understood Steve Jobs, you knew he had a plan and a vision. Companies last far longer than careers, and Mr. Jobs knew the best chance for Apple's survival and domination was to put the best people in place.
Bill Gates once said, "Surround yourself with people who challenge you, push you and teach you to be your best". Indeed! With Tim Cook at the helm, he has taken Apple to a near trillion-dollar valuation and has Warren Buffet on board as a major investor, as the stock has rallied some 200% since the passing of Steve Jobs.
In the mid-1960s, my dad was a broker in the middle of a strong bull market. Suddenly, in 1966, icon Walt Disney passed away, and the stock plunged. Dad said brokers in the office were scrambling to buy shares for themselves and their clients, scooping up anything that was available.
It was a feeding frenzy, no time to mourn, he said. This was a once-in-a-lifetime opportunity for those who had never been Disney (DIS) investors. As they say, the rest is history. As for those who held on to their shares, well, they made lots of money.