When Public Companies are Still Private Fiefs

When a private company is dominated by one all-powerful founder, the chances of it making a successful transition to becoming a publicly listed company are slim. Remember Martha Stewart? On the day she took herself public in 2000, shares traded as high as $50 apiece. Now they're $14.56.

But at least Stewart, a former stockbroker, has some idea of how a public company should be run. In the UK, Mike Ashley took his compay Sports Direct public less than six months ago at 300p per share; after an utter fiasco of an earnings announcement, they're now worth less than half that.

Meanwhile, we're told that Stevie Cohen is interested in selling as much as 20% of his hedge fund to private investors, which is probably smart given what seems to be happening to hedge funds and private-equity shops who are going public.

And then there's the story of John Mackey, who took his company, Whole Foods, public very early on and thereby made a lot of money for his shareholders. But as we've seen with his sock-puppet antics, he never really adjusted his behavior to reflect the realities of having outside owners to whom he was accountable. And eventually his arrogance was responsible for a failed merger and public ridicule.

Right now, Steve Jobs's Apple seems to be the exception to this rule, although even he had a brush with danger when he ran into an options-backdating scandal. As a result, right now I'm a much bigger fan of Apple's products than I am of its overvalued stock. My glossy new iPhone will make me very happy every day for the foreseeable future. But if I spent $550 on four shares of AAPL instead, I fear that I might end up very disappointed indeed.