In this segment of the Market Foolery podcast, host Chris Hill is joined by Stock Advisor Canada's Taylor Muckerman to consider the passing on Sunday of respected rail industry executive Hunter Harrison at age 73, just two days after he went on medical leave, and only about nine months after he took the helm of CSX (NASDAQ: CSX). Investors and insiders saw him as a strong choice to lead -- and transform -- the company, and his death changes the thesis around it.
A full transcript follows the video.
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This video was recorded on Dec. 18, 2017.
Chris Hill: The sad news from CSX, the railroad company. The CEO, Hunter Harrison, has died following complications from a recent illness. And just on Friday, CSX announced that Harrison was going to be taking a medical leave of absence, and Jim Foote, the chief operating officer, was named acting CEO. I remember when we first talked about Hunter Harrison coming to CSX, and one of the things you had said was he has this amazing track record in the industry; he is older. I believe he was 73 --
Taylor Muckerman: He was, yeah.
Hill: I didn't realize that he was ill.
Muckerman: They didn't really make it publicly known, because when CSX brought him on board, they had tried to make the stipulation that they wanted outside independent doctors to assess his health, but he put the kibosh on that and basically said, you're going to listen to my doctors or I'm not going to take the job. So they chose to listen to his doctor, who apparently just wrote a two-sentence note saying he was fine and could lead the company. Unfortunately, passed prematurely, and he still had a few years left on the contract.
Hill: We saw shares of CSX just on Friday drop about 8% just on the news. It's basically stabilized today. But this really does seem to be one of those business leaders who was part of the thesis for investing in CSX, I suppose.
Muckerman: Oh, yeah, I think he was almost entirely the thesis. Before he was made the CEO, when he and the hedge fund that were trying to wiggle their way in, they announced they were going to challenge for a CEO spot and some board seats, the stock shot up about 25% in a single day, thus basically forcing the hand of CSX to bring him on board, and now you're seeing the stock retreat as a result. He's come in and made dramatic changes already, but there's still a lot of work to be done.