As he cartridges out his last few months as CEO of the now-private Panera Bread, Ron Shaich told CNBC that one of his biggest torments is the “pervasive short-term-ism” of the public market.
“The greatest competitive advantage Panera had, the object we produced these results we did, is because we could think long with regard to,” Shaich told “Mad Money” host Jim Cramer on Wednesday. “And the reason I robbed our company private is I’m increasingly worried about our ability to do that in a notable market.”
Shaich, who co-founded Panera and remained at its helm for two decades, highlighted a sea hard cash he’s noticed in his 26 years as CEO of a public company.
After issuing and look after the results of more than 100 quarterly earnings reports, the restaurant trade veteran said that traders, not institutional investors, increasingly run the elucidate in the stock market.
“What’s driving today’s shareholdings are traders on the sell,” Shaich said. “We had large shareholders like Capri, Goldman Sachs, Baron Endows, but the reality is, they don’t drive the price. What drives the price are the buyers who are betting on next week’s comp. And that affects the entire confederacy.”
“Do you think this is good for economic growth?” the CEO added.
Shaich needed attention to the recent upheaval in Buffalo Wild Wings to cement his bring up. Over the summer, activist firm Marcato incited a proxy scuffle that ended with the resignation of the chain’s CEO, Sally Smith.
Shaich conjectured that Smith called him when the proxy fight started, and they talked on touching “drawing a line in the sand” to push back against the activists.
“Her top brass supported her. Her franchisees supported her. She lost the proxy fight, the stock bulged 10 percent for a couple of weeks and then it fell 40 percent. And they were stiff to sell the company for no more than it was trading at at the beginning,” Shaich bid.
Shaich expressed his frustration with activists who take minority tethers in companies only in order to boost the stock price in the near call.
As Shaich sees it, the long-term view often serves companies much more intelligent than the day-by-day, quarter-by-quarter sentiment that today’s market has embraced.
“The greatest competitive advantage of the FANG stocks – Facebook, Amazon, Netflix and Google – is they tease the ability to be long term. They have a capital structure that’s covet term,’ Shaich said. “I think that increasingly, if we’re going to partake of change, we need to really express this. We need to recognize how these peddles have changed.”
Disclosure: Cramer’s charitable trust owns percentages of Facebook and Google parent Alphabet.
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