Jim Cramer: Better Management Can Transform a Stock's Fate

Wesley ParkThursday, Jan 30, 2025 7:08 pm ET
3min read



As an investor, have you ever wondered how a company's management can significantly impact its stock's fate? Jim Cramer, host of Mad Money and former hedge fund manager, has long emphasized the importance of management in determining a company's success. In a recent interview, Cramer highlighted several examples of CEOs who have turned around their respective companies, leading to substantial gains for investors. Let's dive into Cramer's insights and explore how better management can change a stock's trajectory.



Cramer praised several CEOs for their ability to transform their companies, including:

1. Starbucks (SBUX): Brian Niccol, who previously led a successful turnaround at Chipotle, implemented several strategic changes at Starbucks, such as simplifying the menu, improving the value proposition, and enhancing the customer experience. These changes have led to a significant improvement in Starbucks' stock performance.
2. General Electric (GE): Larry Culp successfully transformed General Electric by splitting the company into three separate businesses: GE Aerospace, GE Healthcare, and GE Vernova. This strategic move allowed each business to focus on its core competencies and better compete in their respective markets, leading to a rebound in GE's stock price.
3. VF Corp (VFC): Bracken Darrell's strategic moves, such as selling popular brands and raising cash, enabled VF Corp to report a great quarter and improve its stock performance.

Cramer believes that these CEOs have the ability to "transcend the enterprise" and drive significant gains for investors. However, he also acknowledges that management's limitations can sometimes prevent them from turning around a struggling company, as was the case with Foot Locker.



In a recent admission, Cramer acknowledged that he had too much confidence in new management when he bought Foot Locker for the CNBC Investing Club's Charitable Trust. He realized that orchestrating a comeback for a mall-based store with a lot of excess inventory was too difficult, even for a talented CEO like Mary Dillon. Cramer acknowledged that while management matters, it is not the only factor that determines a company's fate, and some challenges are simply too great to overcome.

In conclusion, Jim Cramer's insights on the impact of management on a stock's fate highlight the importance of evaluating a company's leadership when making investment decisions. By understanding the qualities of a great CEO and the limitations of management, investors can make more informed decisions and potentially identify undervalued stocks with strong management teams. However, it is essential to remember that management is just one factor among many that contribute to a company's success.

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