"Meet The New Boss, Same As The Old Boss" - The Who - "Won't Get Fooled Again"
Summary
- As I noted yesterday, before the US markets opened, RYAM replaced their failed CEO, Paul Boynton with a new CEO, Vito Consiglio.
- However, Mr. Consiglio has no prior experience in dissolving wood pulp, nor the mainstream pulp business, that account for 100% of their sales.
- He noted that he saw the opportunity "to grow demand for its bio-based solutions.” although he has no bio-product experience.
- Moreover, refocusing to bio-based products is risky and there’s no indication from the release that Mr. Consiglio has operated in an entrepreneurial setting before.
- its clear that the market was underwhelmed by Mr. Consiglio’s appointment, given that RYAM's share price closed up only.1.62% whereas the Dow was up 1.87%.
As I noted yesterday, before the US markets opened, RYAM replaced their failed CEO, Paul Boynton with a new CEO, Vito Consiglio. Mr. Consiglio has no prior experience in dissolving wood pulp, nor the mainstream pulp business, that account for 100% of their sales.
While Mr. Boynton's dismissal was long overdue, and I am sure that the new CEO is a very competent manager and although Mr. Consiglio notes in yesterday’s release that:
“I understand the value proposition of its products and see the opportunity to grow demand for its bio-based solutions.”
It is striking that he has no prior bio-based experience that he brings to the job. Further, bio-based businesses are a new and risky endeavour, where success is uncertain and is more often achieved by someone with an entrepreneurial orientation. However, there’s no indication from the press release that Mr. Consiglio has ever operated in an entrepreneurial setting before.
These, and other questions, may have been on the minds of investors yesterday as they traded the RYAM stock.
On the day of the announcement RYAM’s shares closed up by 1.62%.
However, the Dow Jones was up by 1.87% at the close and the Russell 2000 was up by 2.05% on the day.
A stock with a high Beta, and RYAM’s is around 3.8, would normally be expected to rise 3.8x as quickly as the market or fall 3.8x as quickly as the overall market.
Consequently, its clear that the market was underwhelmed by Mr. Consiglio’s appointment.
Perhaps the market sentiment was tempered by the statement that the experience that Mr. Consiglio did bring to the market was that:
“He most recently served as an advisor to multiple private equity firms on deals within the chemicals industry.”
Most public company investors understand that they rarely fare well when a private equity company is bidding for their shares.
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