Shares of Home Depotare rallying today on news its Chairman and CEO Bob Nardelli has resigned. (see earlier posts). But what’s happening behind the scenes? In an interview first on CNBC we found out from one of Home Depot’s largest shareholders, Leon Cooperman. He’s the Founder and Chairman of Omega Advisors, and Former Chairman and CEO of Goldman Sachs Asset Management Division. He spoke by phone.
Leo Cooperman said “I have mixed emotions about it... I think (Nardelli) did an excellent job with the company, he’s a real talent and he’ll be missed. On the other hand public relations will take a vast improvement.”
(Nardelli came under fire by investors for his hefty pay and is leaving with a severance package valued at about $210 million.)
Cooperman explained that Home Depot likely reached a point where something changed, although he didn't reveal the catalyst. “A lot of times when company says business is good... and they come out with a disappointing quarter somewhere along the way something had changed."
"I guess this got to the point where they felt that they would be better off not fighting this battle any longer.”
“I was high on Bob Nardelli (and Home Depot) before today’s announcement – I continue to be high on both.” Explained Cooperman as he defended today’s spike in share price.
“I give you a prediction – it will be along time before Bob Nardelli gets involved in a public company again... This guy is an enormous talent and he’ll wind up making a lot more money with a lot less grief in the private equity world.”
The new CEO is the company’s Vice Chairman Frank Blake, who has never run a company. “Blake had an excellent reputation at GE (parent company of CNBC)," said Cooperman. "I suspect he will need additional talent to back him up, hopefully on the retail level since neither he nor Nardelli were retailers and I think they could use some additional retail expertise.”
"This is a very strong company with terrific cash flows. I want to make it clear, I think Nardelli is a loss. But getting this public relations nightmare behind them and giving both the company and Nardelli a clean slate is a healthy thing."
CNBC’s Jim Cramer had suggested that the move makes Home Depot a leverage buy-out candidate. But Cooperman says he disagrees.
Added CNBC's David Faber: This board (Home Depot's) doesn’t look too smart.
Cooperman:” “I have a totally different take on this. This is a Board that is engaged and involved – They asses things and something changed... and they took action and I respect that. You guys are looking to fill a news hole here! The story is we have a strong company a strong executive and we can look to the future. I think the market's reaction is right. It’s a new beginning.”
