One quality we value at Jacobson & Schmitt Advisors (and believe is often underappreciated by many investors) is the tenure of a company’s leadership, or how long individuals have served in their roles.
Longer CEO and leadership tenures offer significant advantages for both company culture and long-term success. (In our internal research, we refer to this as “value creation”.). Stability at the top allows companies to pursue strategies that prioritize long-term strength, even if that means incurring short-term costs or missing quarterly profit targets. It’s part of building a stronger company for tomorrow and is often overlooked by many investors.
To understand the impact a leader’s tenure might have on a company, think of the U.S. president as a CEO. The 45 U.S. presidents have averaged just over five years in office. That is a short enough tenure to encourage focus on immediate results rather than long-term planning. At Jacobson and Schmitt Advisors, we believe longer tenure allows leaders to develop deep operational knowledge, understand industry dynamics, and make informed decisions while effectively managing risk.
Even more attractive to us as investors is when a company is still led by its founders. These are people who not only had the original vision but also the ability to lead others in making that vision a reality. Their leadership inspires loyalty and trust among employees, empowering them to do their best work and reinforcing the company’s culture and long-term prospects. While these qualities can be difficult to measure quarter by quarter, the impact is clear over time: retaining leadership fosters the kind of long-term thinking that builds something enduring. As investors, we benefit from this approach because their customers want to spend more of their resources on what these companies deliver.
At Jacobson & Schmitt Advisors, we take a long-term approach to the companies in which we invest. In the same spirit, we value management teams that run their businesses for the long term and create sustainable value for us as owners. Our commitment to this philosophy allows us to provide our clients with a portfolio comprised of businesses that are truly built to last.
If you’d like a second opinion on your investment portfolio, schedule a complimentary meeting with us today: https://jandsadvisors.com/get-started
