Dec. 6, 2022

Return on Character With Dan Cooper


Show Notes

What effect does the character of a CEO have on a company’s performance? 

In this episode, Doug and Greg talk to Dan Cooper, Founder & CEO of ROC Investments. After working with Presidents, CEOs of large public companies, philanthropists, and extraordinary leaders from around the world, Cooper founded his firm with a character-based investment strategy, creating a model to quantify the character and integrity of public company CEOs. Focusing on the four pillars of character (integrity, responsibility, forgiveness, and compassion), the model is based on a Fred Keel/Harvard Business Review Study that proved that high-character CEOs outperform low-character CEOs by 5x as return on assets.

The guys discuss Dan’s incredible story, from his work in returning Afghanistan to its people to his attempt to build the first standard gauge railway for the Tanzanian Central Corridor. They also dive into how his character-based model performs and his thoughts on taking a quantitative versus qualitative view of investments.


Key Takeaways

  • [00:37] - Dan Cooper bio
  • [07:24] - Mentorship of Joe Ritchie
  • [11:32] - Development of the character-based strategy
  • [15:22] - Performance results of the Return on Character study
  • [18:18] - Percentage of companies who qualify as satisfactory
  • [21:08] - Cooper’s thoughts on traditional ESG scores
  • [22:00] - How failings of companies like FTX factor into the strategy 
  • [26:04] - Comparisons to the Jim Collins Framework
  • [27:43] - How the ROC portfolio is reviewed and measured
  • [29:02] - Historical examples of high-character CEOs


Quotes

[11:32] - “I developed the first character-based strategy in the early 2000s, and it was out of a conversation with Joe [Ritchie]. He said to me, man, I just wish I knew who the good ones were in the market…I mean the people with character because I think that has a huge impact on the long-term performance of the company.” - Dan Cooper


[15:22 ] - “I actually ended up hiring the firm that developed and did all the research for the book Return on Character, KOW International, which is an extraordinary company. We went out and tried to identify leaders today using some new and really exciting ways of doing it. First of all, they define character in a really wonderful way….the four pillars of character: integrity, responsibility, forgiveness, and compassion, and they prove that when CEOs behave with those four characteristics at a highly consistent level, performance is correlated.” - Dan Cooper


[19:30] - “What ROC Investments represents is kind of a new orientation for consideration, if you will, and how you spend and invest your money to get returns. And we think that not only do we hopefully outperform and do better than the market over time, but we also think if Wall Street wakes up and starts to see that there are a lot of people that care about this, it could have a positive effect. And maybe boards of directors start asking, why isn't my CEO on the list?” - Dan Cooper


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Disclosure

The information in this podcast is educational and general in nature and does not take into consideration the listener's personal circumstances. Therefore, it is not intended to be a substitute for specific, individualized financial, legal, or tax advice. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a final decision.