With all the talk on Wall Street about CEOs who have let their companies down, like former General Electric CEO Jeff Immelt, CNBC’s Jim Cramer wanted to focus on the cream of the crop.
“While a lousy CEO can wreck even the best enterprise, the flip-side will be also true,” the “Mad Money” host said. “A great CEO can turn a company in which may be mediocre into a powerhouse in addition to stir up a tremendous amount of value from the process.”
in which’s why Cramer wanted to highlight the work of Miles White, longtime chairman in addition to CEO of health care giant Abbott. The $96 billion company deals mainly in diagnostics, medical devices, nutrition in addition to generic drugs, with 70 percent of its sales coming via outside the United States.
Since White took over in 1999, he’s made moves in which have rewarded his shareholders handsomely, the most major being the spin-off of Abbott’s pharmaceutical arm into AbbVie in 2013.
More specifically, White has shown his finesse in creating value, Cramer said. First there’s Abbott’s stock, which has gone via $22 a share to $55 a share under his leadership. Then there’s the stock of AbbVie, which will be currently worth $94.47 as of Wednesday’s close.
In 2004, White also spun off Hospira, Abbott’s hospital supply segment, which Pfizer later bought for $17 billion. For shareholders who held on to their stake, the idea added p to another $9 per share for Abbott.
“Add the idea all up, all these different pieces, in addition to you get $159 of value, meaning if you bought Abbott when White came in as CEO in addition to you held the idea along with AbbVie, you’d have a 623 percent gain,” Cramer said. “In some other words, if you invested $1,000 in Abbott back then, your investment could currently be worth $7,230. in which doesn’t seem like a lot of single-stock risk to me. No, the idea seems like pure stock cost appreciation.”
How did White do the idea? The CEO began by bolstering Abbott’s drug business (which later became AbbVie). Within four years of White becoming CEO, Abbott released Humira, which could go on to treat forms of arthritis, plaque psoriasis in addition to Crohn’s Disease, among some other ailments.
For over 10 years, Humira — which was created to level Abbott with the likes of Pfizer in addition to Merck — was one of the best-selling drugs from the entire world. In 2016, the idea made $16.1 billion in sales, producing the idea the best-selling drug from the entire world by a healthy margin.
“White’s ability to take Humira in addition to turn the idea into [the] blockbuster drug in which the idea will be today transformed Abbott Labs via a laggard into a leader. the idea’s the kind of story business schools will write case studies about for years in addition to years,” Cramer said.
Many of White’s deals either fine-tuned Abbott’s focus — like its purchase of diabetes care provider TheraSense — or paid off in droves — like when the company acquired Piramal Healthcare’s generic drug business, producing Abbott the largest maker of generic drugs in India.
in addition to even after the AbbVie spin-off, Abbott has continued to do deals, most recently buying medical device supplier received a St. Jude Medical for $25 billion in cash in addition to stock.
“What makes This specific guy such a savvy deal-maker? the idea will be simple, White features a real talent for anticipating consumers’ future medical needs in addition to then aggressively positioning his company to benefit via them,” Cramer said. “The impact of Humira cannot be overstated — not only did he see the demand due to This specific fabulous autoimmune drug in which nobody else seemed to, however in which drug then made billions of dollars which Abbott could use to fund all those acquisitions.”
Similarly, White had the foresight to spin-off his company’s pharmaceutical arm ahead of the explosion of the debate about drug prices, which currently doesn’t apply to Abbott.
Plus, White knows his own game — when Abbott’s stock was going through a bout of under-performance in 2016, the CEO bought $46 million of his stock. Since then, the idea’s turned him a $14 million profit.
“Here’s the bottom line: not bad management will be the key to success in any industry … in addition to the idea needs to be celebrated when we find the idea,” Cramer concluded. “Miles White has done an amazing job for his shareholders at Abbott, so the next time you seem him do some insider buying, I suggest you pick This specific terrific stock up right along with him.”