| Every business is run by a team. And just like a great sports franchise needs an inspiring and visionary coach to maximize the win rate, so does a great company. And the best of the best is often the company founder. Jack Ablin, chief investment strategist at money manager Cresset, calls founder-led companies, "one of the most compelling structural investment opportunities in modern equity markets." That's an understatement. Over the past five years, founder-led companies in the S&P 500 beat that index by 167 percentage points. Companies run by outside "professional" CEOs lagged the index by 11 percentage points. Many corporations try to make their senior executives act like owners by showering them with options or restricted stock. That doesn't work. For starters, a professional CEO owns less than a fifth of the typical stakes of founders. And they are always looking to jump ship for a better deal. Superstar CEOs are as tough to hang onto as superstar athletes. Every team wants them, and someone is always willing to pay more. Founders, on the other hand, don't jump ship. Mark Zuckerberg isn't going to be lured away by Microsoft. And Jensen Huang won't leave to take the helm at Apple. Moreover, founders know more about their company, their employees, their suppliers, their products (and often their market) than anyone else. These are individuals with: - Deep operational knowledge
- Clear insight into future catalysts
- Skin in the game
- Absolute conviction in their own business
Yet there is another factor that is often overlooked: Founders very identities are tied to their companies. A long, profitable stretch is not just a satisfying achievement. It's a personal validation. They took big risks, managed the challenges, beat the odds - as well as the competition - and are enjoying the rewards. It's tough to put a dollar value on that. Ask any long-term holder of founder-led companies like Tesla (Nasdaq: TSLA), Nvidia (Nasdaq: NVDA), Meta Platforms (Nasdaq: META), Salesforce (NYSE: CRM), BlackRock (NYSE: BLK), or Palantir (Nasdaq: PLTR). If you look at history - and the academic evidence - founder buying is one of the few consistently reliable indicators in the market. Bottom line? You don't need to predict the economy, or time the market, or outguess the Fed on rate cuts. You can start your search for the next great stock by focusing on the handful of hyper-competent individuals who know more about the companies they run than anyone else. What are some of today's fastest-growing, founder-led companies? Essent Group (NYSE: ESNT), Harrow (Nasdaq: HROW), Carvana (NYSE: CVNA), MongoDB (Nasdaq: MDB), CrowdStrike (Nasdaq: CRWD), Capital One (NYSE: COF), Spotify (NYSE: SPOT), and MercadoLibre (Nasdaq: MELI) are good examples. I'm not recommending that readers buy all these stocks. I'm just suggesting that it's a good place to begin your search for outperformers. For most executives, being so dedicated to your work that it forms a significant part of your identity is not healthy. With founders, it's an unavoidable reality. One that tends to benefit the other shareholders as well. Good investing, Alex P.S. Founder-led companies are just one example of the kind of edge smart investors are looking for right now. At the 2026 "Millionaire-Maker" Summit tomorrow at 11 a.m. ET, you'll hear directly from me about the rare economic forces lining up - and the specific sectors and strategies I believe are best positioned for outsized gains over the next six months. It's completely free, and seats are limited. Click here to register now. |
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