Leadership or lack thereof is without a doubt one of the biggest problems in America today. Yesterday, one of the biggest news items in the market was the continued collapse of the Aubrey McClendon's image as business maverick and celebrity CEO to a guy that maybe saw himself above it all.
The nerve of and vision of an old school wildcatter McClendon and Ward started Chesapeake Energy (CHK) with $50,000 in capital and ten employees. They revolutionized horizontal drilling and went after unconventional reservoirs. The stock was the stuff of legends climbing to $65.00 in June 2008 from $2.50 in January 2000. The shares got slammed to $15.64 by February 2009 and have been up and lately (really) down since.
All kinds of news is coming out about dealings with the company that includes a billion dollars in loans, perhaps self dealing with a personal hedge fund on the side and now McClendon is dropping the CEO title. Wall Street loved this guy. I loved this guy.
A Horatio Alger story that allows everyone to jump on the bandwagon and make a fortune is what America is all about. But there is a cautionary tale here about the celebrity CEO. This stock has been on a rollercoaster the last few years, due in part to changing dynamics in the natural gas industry but also in part due to the high-jinx of McClendon whose behavior raised a few red flags. As this market continues to move higher you have to beware of how to deal with the celebrity CEO.
Before I get into the nuts and bolts of how to navigate being long stocks with a celebrity at the helm, I want to point out part of this story is a narrative I've written about often. People in power letting us down to the point where we are so disgusted even a cohesive game plan wouldn't work. Government and corporate America are losing face at breakneck speed in this country. I think the rub on business is not fair but it is the result of the non-stop campaign by socialists from the White House down pounding away in a bald-faced effort to snatch their wealth.
Who Do You Trust?
In the Edelman Trust Global Barometer Survey (a must read for any business owner) the credibility rating for corporation and government plummeted. The good news is people are beginning to have more faith in people, beginning with the man in the mirror.
This is a global survey but the themes are mostly the same. In America, of those surveyed on the statement: "% who do not trust them to tell truth."
It's great that we are feeling better about ourselves and all we need now is to be able to hire ourselves or have the power to stop the larceny of government. In the end, the system was designed so we do have that power. Not as a collective but as concerned citizens exercising our rights. It's all about a nation that is as strong as its weakest link and all links understanding and accepting the challenge to give it their all.