Management Turnover as Change Agent

Monday, December 7, 2015

November Executive Turnover Points Positive For U.S. Economy

Liberum Research's latest November executive turnover numbers were even more positive than the previous month of October and continued to point in a positive direction for the American economy.  November's executive turnover numbers showed increases over last year's November figures in all four key categories Liberum analyzes for its monthly report (see details below).  The executive turnover figures in November as compared to the previous month of October also showed positive increases in all four categories, something we have not seen for a long time and together indicates positively for the U.S. economy.  The growing executive turnover numbers dovetailed directly with the positive employment growth numbers released last week by ADP for November and more importantly, the U.S. Government's Bureau of Labor Statistics (BLS) November Employment Report.

Typically, Liberum's monthly executive turnover figures tend to follow a similar pattern with the U.S. Government's Bureau of Labor Statistics' (BLS) Monthly Employment Report as well as ADP's Monthly Private Employment Report. The ADP and BLS November Reports exceeded expectations by most analysts and as a result, the Federal Reserve seems even more likely to begin raising interest rates slightly for the first time since the 2008 financial crisis.  According to the ADP November Report:

ADP National Employment Report: Private Sector Employment Increased by 
217,000 Jobs from October to November according to the November ADP National Employment Report®

"The strongest gains in the service sector since June led to greater employment growth in November,”
said Ahu Yildirmaz, VP and head of the ADP Research Institute. “The increase was driven in large part 
by a rebound in professional/business service jobs.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Job growth remains strong and steady. The 
current pace of job creation is twice that needed to absorb growth in the working age population. The 
economy is fast approaching full employment and will be there no later than next summer.”
The employment news from the U.S. Government's Bureau of Labor Statistics (BLS) was very close to ADP's Employment Report.  According to the November BLS Report:

Total nonfarm payroll employment increased by 211,000 in November, and the unemployment
rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in construction, professional and technical services, and healthcare.

In November, the unemployment rate held at 5.0 percent, and the number of unemployed persons, at 7.9 million, was essentially unchanged. Over the past 12 months, the
unemployment rate and the number of unemployed persons are down by 0.8 percentage point and 1.1 million, respectively.

Liberum expects the early winter months will continue to see the economy moving forward but, as we stated in the previous month and earlier months, with blips along the way.  We continue to expect executive turnover numbers in the early winter months will also remain fairly positive. Overall, we remain positive for the American Economy despite the likelihood of a slight increase in interest rates from the Federal Reserve and continuing economic difficulties abroad.
Liberum Comparison Breakdown of Key November Executive Turnover Figures

Below is a breakdown of Liberum's key executive category percentage changes for November 2015 compared with November a year earlier and the previous month of October 2015.    
November 2014 Compared to November 2015
  • For November 2015 increases in turnover occurred in all four key categories.  CEO changes increased 18% from November a year earlier, CFO changes increased 6%, C-level changes increased 37%, and board of director changes increased 44%, respectively.  
October 2015 Compared to November 2015
  • The month to month changes in executive turnover for all four key categories saw increases. CEO changes increased 28%, CFO changes increased 6%, C-level changes increased 9%, and board of director changes increased 14%.      
Below are the overall turnover totals for November 2015.  The information is just illustrative of how institutional investors could view executive turnover and its possible relationship with a company's performance.  Using Liberum's database could offer a totally new perspective on investment and is a potential way to come up with unique special situation opportunities.  Executive search firms can use the information to generate new leads and new clients, and consulting firms can use the data for a variety of analytical purposes.   

Call now (212-988-5497) or email and get a no obligation one week trial to Liberum's online management change database. Find out why Hedge Funds, Executive Search, Business Intelligence, and Consulting firms all rely on Liberum's data.
According to Liberum's Management Change Database, a total of 250 CEO related changes occurred during November 2015. Here are 51 changes from the time period that caught my eye.  By significant, I'm looking for situations where I think a particularly strong or weak choice has been made - given the apparent current state of the company - or where there is an interesting special situation. (Anyone using Liberum's database could do the same kind of analysis for other key titles, e.g., CFOs, COOs, CMOs, CIOs, Presidents, etc.)

Change date   Co name Ticker Market cap
11-02 Enteromedics Inc.  ETRM  NASDAQ  33
11-02 Intrum Justitia IJ  STO 21170
11-02 Quest Resource Ho  QRHC NASDAQ  85
11-03 Commerzbank  CBK LONDON
11-03 DSW Inc.  DSW  NYSE  2180
11-03 Groupon, Inc.  GRPN  NASDAQ  2640
11-03 Kappahl KAHL  STO  2370
11-03 Razor Resources Inc  RZOR  OTC  607830
11-04 Beijer Electronic  BELE  STO  1020
11-04 First Capital Bcp  FCVA NASDAQ  73
11-04 Lumber Liquidator  LL  NYSE  420
11-05 Armistice Resourc  AZ  TORONTO 42
11-05 Wound Mgmt Tech  WNDM  OTC  7
11-09 E.I. du Pont de Nemours & Co  DD  NYSE  58520
11-09 Elementis  ELM  CVE
11-09 Loomis AB  LOOMB  STO
11-09 Santos  SSLTY  OTC  3710
11-09 XLI Technologies, Inc.  MYXY  32
11-10 Jason Industries, Inc.  JASN  NASDAQ  84
11-12 Advance Auto Parts, Inc.  AAP  NYSE  12050
11-12 Connecture, Inc.  CNXR NASDAQ  93
11-12 Entree Gold Inc.  EGI  NYSE  38
11-12 Platinum Group Me   PLG  NYSE 161
11-12 Sunshine Capital, Inc.  SCNP  OTC
11-13 La Quinta Holding   LQ  NYSE  1910
11-13 LDK Solar Co Ltd.  LDKYQ  OTC  20
11-16 CNA Financial Corporation  CNA  NYSE  9740
11-17 Akeena Solar, Inc  WEST  OTC  618197
11-17 Bob Evans Farms, Inc.  BOBE  NASDAQ  
11-17 Elephant Talk Com   ETAK  NYSE  58
11-17 TiVo Inc.  TIVO  NASDAQ  893
11-17 Virtual Piggy, Inc VPIG  OTC  38
11-18 Bridgeline Digital, Inc. BLIN  NASDAQ  5
11-18 Intelligent Livin  ILIV  OTC  14019
11-18 Korian SA  KORI  EPA  2840
11-18 Pivot Pharmaceuticals Inc  PVOTF  OTC  98
11-19 Kalobios Pharmace  KBIO  UTC  75
11-19 Kemper Corporation  KMPR  NYSE  2110
11-19 Lantronix, Inc.  LTRX  NASDAQ  17
11-19 Markel Corporation  MKL  NYSE  12560
11-19 NBC Capital Corporation NBY  14
11-19 Portage Biotech Inc  PTGEF  OTC  33
11-20 Avalanche Biotechnologies Inc  AAVL  NASDAQ  186
11-23 Alfa Laval  ALFALAVAL  OTC
11-23 Global Healthcare  GBCS  OTC  16
11-23 TerraForm Global, Inc.  GLBL  NASDAQ  480
11-23 Truecar, Inc.  TRUE  NASDAQ  719
11-24 Akers Biosciences  AKER  NASDAQ  10
11-25 MannKind Corporation  MNKD  NASDAQ  896
11-27 Point Capital Inc  PTCI  OTC  85
11-30 Broadwind Energy,  BWEN  NASDAQ  30
> Drugs- 174> Banking - 161
> Energy - 143

> Drugs/Biotech - 20
> Energy- 20> Banking - 18
> Metals/Mining - 17

> Drugs/Biotech - 24
> Energy - 16
> Banking - 14

> Drugs/Biotech - 75
> Energy - 43
> Banking - 32

Investors need to diligently monitor key management changes. 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.
  • New CEOs know more than the market about the company.  Their decision to take the position contains information.  Likewise the departing CEO. 
  • Likewise departing CFOs New CFOs will bring new skills and often-times a new direction.  This is normally significant, and worth analyzing.
Liberum Research, the independent research firm focused on corporate management change, has developed an online relational database designed to assist institutional investors develop special situation investment ideas related to executive management change. While special situation investing traditionally revolves around corporate restructuring, spin-offs, and acquisitions, executive management changes, depending on the circumstances, can represent a short or long-term investment opportunity. 

Liberum's over ten-year-old database offers institutional investors the ability to examine: 
  • an individual company, 
  • sector/s, 
  • corporate titles
  • groups of companies, 
  • market caps
  • and/or geographic region/s/ locations via a metric of one's own choosing.  
  • you can use the information individually or in combination with a number of other financial tools to develop unique investment ideas. 
Subscribers often take the service as an electronic feed rather than as an online service. Through the use of Liberum's electronic feed, investment firms have the ability to integrate Liberum's management change data with a variety of other feeds and data applications which, when combined, could be used as a sophisticated method for developing potential short and long-term investment ideas.  Liberum's database whether used as an online tool, an electronic feed, or as a means to receive customized reports is broken down into a number of highly specific fields that afford a user the ability to easily search and manipulate data.  

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