Why Smart Investors Should Check Out These Women-Led Companies
Anyone who doubts the presence of a glass ceiling just needs to look at the numbers: Just 6 percent of Fortune 500 companies have women CEOs. That’s despite a growing body of research that shows that women-led companies tend to perform better.
So should smart investors aim to invest in those rare companies that have women calling the shots?
Women in Leadership Roles Add to Profitability
There’s too much research to ignore. Women in corporate leadership roles increases corporate profitability.
The Peterson Institute for International Economics (PIIE) teamed up with EY to review 21,980 global publicly traded companies in 91 countries from a mix of industries and sectors. The results confirmed that having at least 30 percent of women in C-Suite positions adds 6 percent to a firm’s net profit margin, on average.
Between 2002 and 2014, 80 firms from the Fortune 1000 with women CEOs bested the S&P 500 performance by 226 percent, according to a Quantopian study. The top performers were Mindy Grossman at HSNi, parent of the Home Shopping Network and Debra Cafaro at Ventas, a healthcare and senior living REIT. During that period, both women leaders increased an initial investment in their companies by more than 500 percent.
McKinsey and Company has studied this topic for a while, and produced an abundance of research. Their report, “Women as a Valuable Asset” (pdf) revealed that “companies where governing positions are held both by men and by women have higher operating margin and market capitalization in the respective industry.”
There’s too much research to deny the impact of women in leadership roles leading to increasing corporate profitability. Here are some ideas about why this is so.
Why Women Make a Financial Impact on Profitability
Women and men have distinct leadership styles and focus on different aspects of a corporate structure. Their differing backgrounds and experiences create a greater knowledge base than one coming solely from men. Ultimately, by combining both men and women in leadership roles, a company can achieve greater business results.
Laura D’Andrea Tyson, an economics and business professor at the Haas Business School of the UC Berkley, noted at the 2016 World Economic Forum that women benefit business in many ways, including improved innovation and complex decision-making.
Investing Ideas From Women-Led Companies
If you’re looking to capitalize on the business acumen of women in high places, here’s are some funds and stocks to check out. Of course, whenever evaluating a firm or fund for investment potential, do your own due diligence and research.
For the fund investor, consider these two “women focused” funds:
- Pax Elevate Global Women’s Index fund (PXWEX). This fund invests in the top stocks of companies advancing women’s leadership.
- SPDR Gender Diversity Index ETF (SHE). This recently launched ETF investments in companies with women in “CEO, board or senior leadership” positions.
For individual stock pickers, following is a list of the 28 S&P 500 companies with women CEOs as of June 2017, via the nonprofit Catalyst:
- Mary T. Barra, General Motors Co. (GM)
- Heather Bresch, Mylan N.V.
- Michele Buck, The Hershey Company
- Debra A. Cafaro, Ventas, Inc.
- Safra A. Catz, Oracle Corp. (co-CEO)
- Debra Crew, Reynolds American Inc.
- Mary Dillon, Ulta Beauty
- Adena Friedman, Nasdaq
- Margaret "Margo" Georgiadis, Mattel, Inc.
- Lynn J. Good, Duke Energy Corp.
- Shira Goodman, Staples, Inc.
- Tricia Griffith, The Progressive Corp.
- Marillyn A. Hewson, Lockheed Martin Corp.
- Vicki Hollub, Occidental Petroleum Corp.
- Margaret Keane, Synchrony Financial
- Gracia C. Martore, TEGNA
- Beth E. Mooney, KeyCorp
- Denise M. Morrison, Campbell Soup Co.
- Indra K. Nooyi, PepsiCo, Inc.
- Phebe N. Novakovic, General Dynamics Corp.
- Patricia K. Poppe, CMS Energy
- Debra L. Reed, Sempra Energy Corp.
- Barbara Rentler, Ross Stores, Inc.
- Virginia M. Rometty, International Business Machines (IBM) Corp.
- Irene B. Rosenfeld, Mondelez International, Inc.
- Susan N. Story, American Water Works Company, Inc.
- Meg Whitman, Hewlett-Packard Enterprise
- Geisha Williams, PG&E Corp.
It’s not a surprise that women in leadership positions move companies forward financially. If you’re convinced by the research, examine this list of women-run companies and run them through a thorough analysis. You might find some gems worth your investment dollars.
Barbara A. Friedberg is a former portfolio manager and university investments instructor. Her writing appears on various websites including Robo-Advisor Pros.com and Barbara Friedberg Personal Finance.