PAUL SCOTT today said18 Mar 2019 21:12
Boohoo (LON:BOO)
Board changes - now a £2bn market cap group, this is way above my normal size company for inclusion here. However, myself, and many readers, made fantastic profits from this share in 2015-2017, when it more than 10-bagged from the lows. So I like to keep an eye on it.
Also, note that BOO shares have been one of the few growth stocks to survive the recent market sell-off reasonably intact.
I wondered whether Mahmud Kamani would be comfortable taking a back seat. Knowing him, my feeling was definitely not! Sure enough, he's fallen out with the outsider Chairman, who has left. Mahmud has stepped back up, to Executive Chairman. I think that's the right role for him. As co-founder, driving force behind the group, and a workaholic, I never saw him being happy taking a back seat role.
It will be interesting to see how long the new CEO, John Lyttle, formerly of Primark, will last. He started on Friday 15 March 2019. I'd be surprised if he's still in that role in 6 months't time, but you never know!
BooHoo is in the classic situation of being originally a small, highly entrepreneurial business, which is now being pushed to behave more like a larger, stock market listed company. I'm not terrible keen on that type of pressure. In my view, companies often seem to go wrong, when they stop being entrepreneurial, and turn all corporate. Just look at Superdry (LON:SDRY) to see how performance went badly wrong, when professional managers took over from the founder entrepreneurs.
From an investment point of view, I don't really care if companies behave, or structure themselves inappropriately. As long as the founders are in there, running things well, and making money for shareholders, then I couldn't really care less whether or not they comply with traditional rules on how the Board is structured, etc.. It only becomes a concern if they're flouting the rules, and performing badly. Successful entrepreneurs often do things differently. I think it's important to allow listed companies with entrepreneurial management, to have some flexibility. Hence why I would back Mahmud Kamani any day of the week, over the outgoing Chairman.
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