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Published on April 15, 2024

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Virgin Galactic (SPCE) Short: 74.6% Alpha Based on CEO Ability

On March 15, 2021, ManagementTrack recommended a short position on Virgin Galactic (SPCE), focusing on the appointment of Michael Colglazier as CEO. Leveraging an in-depth analysis of Colglazier’s prior experience at Disney and its relevance to Virgin Galactic’s unique challenges, ManagementTrack anticipated the company’s performance under his leadership would not meet market expectations, generating significant alpha.

ManagementTrack’s Investigative Process

  1. Conducted Interviews with Former Peers: ManagementTrack’s team of investigative journalists interviewed nine former colleagues who worked with Colglazier for a combined 135 years, gathering insights into his leadership style, strategic thinking, and operational effectiveness.
  2. Assessed Fit for Virgin Galactic: The insights from these interviews were analyzed to assess how Colglazier’s strengths and weaknesses would translate to the challenges facing Virgin Galactic, particularly its transition from design and testing to commercial operations.
  3. Mapped Executive Experience to Company Context: ManagementTrack evaluated Colglazier’s experience in customer experience and brand management against Virgin Galactic’s need for operational excellence and rapid technological development.

Why ManagementTrack Believed They Would Fail

  1. Mismatch of Experience: Colglazier’s background in theme park operations and customer experience at Disney was seen as a poor fit for the operational and technological challenges of commercial spaceflight.
  2. Underestimation of Operational Challenges: The analysis suggested that Colglazier might underestimate the complexities involved in scaling Virgin Galactic’s spaceflight operations.
  3. Overemphasis on Branding: ManagementTrack believed that an overemphasis on customer experience and branding, without parallel improvements in technology and operations, would not suffice to meet the company’s ambitious goals.

Outcome and Performance

ManagementTrack’s recommendation to short SPCE was validated when the stock underperformed, generating 74.6% alpha between the recommendation date and the close date. This performance was attributed to delays in commercial flights and skepticism regarding the company’s ability to meet its technological and operational milestones.

Key Takeaways

  1. Importance of Executive Fit: The case underscored the critical importance of executive experience and skill set alignment with company-specific challenges.
  2. Operational Expertise Over Brand Management: For technology-intensive ventures like Virgin Galactic, operational and technological expertise in leadership is paramount over branding and customer experience.
  3. Validation of ManagementTrack’s Process: The successful prediction validated ManagementTrack’s process of combining deep executive analysis with company fundamentals.


The Virgin Galactic case study exemplifies ManagementTrack’s unique approach to investment research, emphasizing the pivotal role of executive leadership in determining a company’s success. By meticulously analyzing Michael Colglazier’s fit for the CEO role at Virgin Galactic, ManagementTrack was able to anticipate the company’s challenges and recommend a profitable short position.

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