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The Best-Performing CEOs in the World


giofranchi
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There is an HBR podcast where they talk about their methodology: https://hbr.org/ideacast/2015/10/the-condensed-november-2015-issue.html

 

In a nutshell this ranking used to be entirely based on financial metrics but this year they added in an environmental, social, and governance (ESG) ESG ranking. They waited each factor based on "gut feelings" and even mentioned that they re-ran the rankings several times to see if what they had "looked right".

 

To me it seems entirely idiotic to 1) change their yardstick of how they are measuring CEOs, 2) adding in the ESG ranking and 3) arbitrarily setting the weights to produce a type of list that "made sense". Seems like typical MBA none sense.

 

Here is an additional article they put together to explain why Warren Buffet isn't included on the list: https://hbr.org/2015/10/wheres-warren-buffett

 

"The second factor is Berkshire’s environmental, social, and governance (ESG) performance. On this metric, Buffett ranked #798 out of the 907 CEOs we looked at. Sustainalytics, the research firm that produces the ESG scores, says that low rank is partly due to Berkshire’s poor disclosure on its governance and social policies. Another consideration was how Berkshire incorporates ESG issues into its selection of investments. Relative to peer holding companies, Berkshire’s initiatives for addressing sustainability within its investees are weak, Sustainalytics found. Although the ESG ranking counts for only 20% of a CEO’s overall ranking, Buffett’s very low placement in it was enough to pull him out of the top 100."

 

 

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They are using the consensus data as most of these are great franchises that a monkey could run...no offence to monkeys of course. Well except the Volkswagen CEO which a monkey would not have blown up the company like he did!

 

Have Harvard excluded Warren Buffett from the list because they turned down his application to attend their institution? There is a huge disconnect right now that this list highlights but for value investors it is comforting to know that we will have opportunities until the end of time because of group think and crowd following. The institutional imperative is alive and well!

 

Mr. Buffett from Business Insider in 1984:

 

"I can only tell you that the secret has been out for 50 years," Buffett writes, "...yet I have seen no trend toward value investing in the 35 years I've practiced it. There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It's likely to stay that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper."

 

I thank you GIO for all of your hard work on this board. All information is educational and useful both good and bad...we can "never" stop learning as what has worked in the past may not work in the future. Looking back at some of my posts on this board some I have written "may" have seemed a bit harsh...and I apologize to some of the board members that I may have offended. Having said that....the only way to be successful in investing is to have "personal" conviction in your ideas...and when you are wrong find out quick.

 

"I am right, and you are smart, and sooner or later you will see that I am right."

 

Charlie Munger

 

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