Management is critical to a company's success. And it's often a good place to start your evaluation of whether one company would make a better investment than another -- especially within the same sector or industry.Here's a primer on how I identify the poorly run players in a specific business, plus my three picks for the worst-managed U.S. companies of the year.
Put it all together and GM is clearly one of the worst managed companies in the U.S. today. And its stock is trading at multi-decade lows. Time Warner. I have been kind to Time Warner in the past. I thought that CEO Richard Parsons was an admirable fellow. However, he could not salvage what was left after one of the worst ever corporate mergers ever -- AOL Time Warner in 2000. I don't believe that Time Warner, under Jeffrey Bewkes, Parson's successor, will be able to return to the pre-AOL dominance that it once enjoyed. The glory days under the leadership of the late Steve Ross are no more than a distant memory for the company. Saddled with $37 billion of debt and not enough assets to sell to pay down the debt, Time Warner remains in financial hell. And in my opinion, cost cutting will not help the company manage its way out of debt as well. I see the delay of the next installment in the Harry Potter movie series as indicative of the operational problems at Time Warner. With better management and improved economic conditions, there is a chance that my 2008 vintage of poorly managed companies could turn themselves around. However, those are not bets I would be willing to make. GM is a special case and is likely to be supported by the U.S. government, much in the way the government rescued Chrysler in the 1970s.
Take at fresh look at the three companies on my list and understand why they have performed poorly.. Identify other companies that are poorly managed that meet the criteria spelled out above.