When a private company is dominated by one all-powerful founder, the chances
of it making a successful transition to becoming a publicly listed company are
slim. Remember Martha Stewart? On the day she took herself
public in 2000, shares traded as high as $50 apiece. Now they’re $14.56.
But at least Stewart, a former stockbroker, has some idea of how a public company
should be run. In the UK, Mike Ashley took his compay Sports
Direct public less than six months ago at 300p per share; after an utter
fiasco of an earnings
announcement, they’re now worth less than half that.
Meanwhile, we’re told that Stevie Cohen is interested
in selling as much as 20% of his hedge fund to private investors, which is probably
smart given what seems to be happening
to hedge funds and private-equity shops who are going public.
And then there’s the story of John Mackey, who took his company,
Whole Foods, public very early on and thereby made a lot of money for his shareholders.
But as we’ve seen with his sock-puppet antics, he never really adjusted his
behavior to reflect the realities of having outside owners to whom he was accountable.
And eventually his arrogance was responsible for a failed merger and public
ridicule.
Right now, Steve Jobs’s Apple seems to be the exception to
this rule, although even he had a brush with danger when he ran into an options-backdating
scandal. As a result, right now I’m a much bigger fan of Apple’s products than
I am of its overvalued stock. My glossy new iPhone will make me very happy every
day for the foreseeable future. But if I spent $550 on four shares of AAPL instead,
I fear that I might end up very disappointed indeed.