As Executives Are Ousted, Investment Opportunities Arise
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The credit crisis and stock market turmoil are contributing to a shuffling of chairs in the executive suite. Turnover among chief executives and chief financial officers climbed 19% and 21%, respectively, in the first quarter (for a total of 1,338 job changes) compared with the corresponding period last year, according to a research firm that tracks management changes, Liberum. In March alone, changes among chief financial officers surged 41%.
Top-level moves often signal a new direction for a company and can pose opportunities for investors. “Certain management changes should be viewed as a ‘special situation’ that can have a direct and major impact on a company’s performance and share price,” Liberum’s director of research, Richard Jacovitz, wrote in a recent report.
E-Trade, for example, got a new chief executive in March, along with a hefty cash infusion from an investment consortium. The new executive and the bailout seem to have put the brakes on E-Trade’s stock slide.
