EUR 442.45 For Business Accounts Only

Buying Into CEOs With a Track Record

After years of operational underperformance by the management of Bed Bath & Beyond, Inc. (BBBY), which translated into diminishing returns for shareholders, a trio of activist investors called for a strategic overhaul in March 2019. After revamping the board in May 2019, our interest turned to the recent hiring of CEO Mark Tritton. Drawing similarities from covering and analyzing successful turnaround stories, we believe there is more to come for BBBY.

Buying Into CEOs With a Track Record...
Brink’s Co. (BCO): In June 2016, BCO appointed its new CEO Douglas Pertz, who was backed by activist Starboard Value LP. At the time, Mr. Pertz was being termed as a “turnaround specialist” coming into the job due to one of his many previous exploits like at Recall Holdings (REC – previous Spinoff from Brambles), ramping up the stock price by 100% in 2 years before its takeover by Iron Mountain (IRM). In 2015 going into 2016, BCO was going through competitive pressures in the sector but the primary headwinds affecting BCO’s top- and bottom-line growth and operational inefficiencies in some of its largest markets like the US. However, since the appointment of Mr. Pertz and addressing these issues, over the last 3 years, BCO’s shares have more than doubled from the $37 mark at the release of our analysis (Sep 2, 2016) to the current $86 level, giving a +130% return Vs. S&P Midcap Index Returns of ~21% to investors.

Tableau Software (DATA): One of the more controversial names covered due to its stock being beaten down 55% in one year, negatives surrounding its sales execution and heightened competition in its cloud technology platform, DATA was a name frowned upon by most investors at the end of 2016. However, with the inclusion of its new CEO Adam Selipsky, who had a strong track record of growing businesses from scratch (who helped Amazon Web Services (AWS) grow from a pre-revenue, 10-person start-up to a $10bn first-mover in the cloud-computing space), we believed that he could bring his expertise to DATA to strengthen its cloud platform. Since his appointment, over the next 3 years, DATA was acquired by Salesforce (CRM) for $15.7bn in an all-stock deal in June 2019, with shares of DATA jumping to $175 by July 2019, giving a +310% return to investors from the release of our analysis (Dec 22, 2016) Vs. S&P 500 Index returns of ~29%.

The Edge View...
Drawing similarities from covering and analyzing successful turnaround stories such as BCO and DATA, we believe (i) the new CEO at the helm with a track record of successful turnarounds (ii) a detailed restructuring plan in place for the company and (iii) the watchful eye of three activists presents a compelling investment opportunity for investors in BBBY.