Cramer: In Praise of These 5 Bold Executives
You've got to be one heck of a business person to get called out by Jim Cramer. On Wendesday he called out five.
With both the Dow Jones and S&P 500 surging this year, and making new all-time highs almost every day, it's become apparent that until a few months ago, stocks were relatively inexpensive. And the Mad Money host is largely dismayed that most business leaders didn't recognize the opportunity especially in their own industries.
"There should have been more M&A. That's right, during this whole run-up, there should have been many more deals, more acquisitions to spur growth, or to take market share," he insisted.
Instead, only a handful of executives recognized that potential. That is, only a few executives increased the value of their companies by making smart acquisitions. In hindsight Cramer thinks it's fair to say the corporate leaders who were able to sift through the noise and make strategic moves were indeed shrewd business people.
These are the kinds of people that Cramer believes are adept at maximizing shareholder value – these are the kinds of people that Cramer wants you to identify when he talks about strong leadership in the corner office.
Following are the 5 CEOs Cramer called out on Wednesday's broadcast and the strategic moves they made to drive shareholder value.
Berkshire Hathaway Chariman and CEO Warren Buffett bought Heinz three months ago, Cramer said, for $72.50 a share, or $23.3 billion— a 19 percent premium to the stock's all-time high. "In retrospect given how high rivals such as Campbell's, General Mills, and Hershey have traded, Buffett practically stole the company."
John Malone's Liberty Global struck a deal in February to buy British cable group Virgin Media for about $15.75 billion. The deal gave Liberty entry to one of Europe's biggest and most competitive telecom markets. "Everyone's always talking about going global but when going global finally gets cheap, only Malone stepped up," said Cramer.
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In late 2012, Eaton CEO Sandy Cutler struck a deal to acquire Cooper Industries in a deal valued at $13 billion. At the time Eaton expected this transaction to create cost synergy of $535 million by 2016. Additionally, this acquisition is expected to be accretive to the company's earnings and lead to operating earnings of 35 cents in 2014 and by 45 cents in 2015. "Eaton and Cooper will make two and a half times more money than Eaton and Cooper would make collectively otherwise."
Jeffrey Sprecher, the CEO of the Intercontinental Exchange struck a deal to buy the NYSE Euronext in a transaction valued at approximately $8.2 billion. The 220 year old NYSE, which bought the Euronext about six years ago, is the world's largest stock exchange. Its listed companies with a combined market capitalization of more than $14 trillion -- approximately the size of the U.S. economy itself. "Sprecher had a vision and now he will be running the largest exchange in the world," said Cramer.
Rich Kinder the CEO at Kinder Morgan bought not one, but two companies, El Paso and Copano. The acquisition of Copano Energy for $3.22 billion allowed Kinder Morgan to tap into growing demand for infrastructure to transport vast supplies from the shale fields of Texas and Oklahoma. Meanwhile, Kinder Morgan said it's acquisition of El Paso created the fourth largest energy company in North America.
What's the bottom line?
"Buffett, Malone, Cutler, Sprecher, Kinder. They weren't afraid. They were bold," said Cramer. They knew how to unlock shareholder value when the outlook was murky. Imagine what they can do as the outlook clears.
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