Charting the CEO 100 Index.

While there's no sure thing in the investment game, a sound alternative may be to place bets on companies with top-performing chief executives.

Among the most popular investments are those in companies with outstanding leaders making the right moves. Certainly, that was the case in recent interviews we conducted with more than 200 of the largest portfolio managers in America.

For example, under Henry Singleton, Teledyne's stock outperformed the rest of the Standard & Poor's 500. This spectacular success did not continue when he stepped down as CEO. More recently, Stanley Gault led Rubbermaid to outstanding performance, which was reflected in superior stock-price growth. But when struggling Goodyear tapped him as CEO, investors in the giant rubber company saw their stock rise several hundred percent in a year.

Most stocks trail market averages over time. But truly spectacular gains by roughly one-quarter of all companies lift market averages. To document the relationship between CEOs and shareholder value, we charted the stocks of 800 large public companies from 1989 to 1991 with one CEO at the helm in that time.

During the period, 100 CEOs chalked up strong stock-price gains for their companies. Bernard Marcus helped Home Depot's stock price expand 619 percent (see chart), while the S&P index gained just 50 percent. William Gates' Microsoft followed with share growth of 526 percent. Trailing the leaders were Philip Knight's Nike at 446 percent and Donald Fisher's The Gap at 412 percent.

Also making the cut were household corporate names Wal-Mart (275 percent stock appreciation), Coca-Cola (259 percent), and Merck (188 percent). Merck's Roy Vagelos is CE's 1992 Chief Executive of the Year (see cover story). More frequently, however, high-performing companies on the CEO 100 are not as well-known among investors. Some examples: UNUM (200 percent), Dover (189 percent) and Viacom (169 percent).

There are several reasons the CEO has a significant impact on shareholder value. First, the CEO decides how important stock-price growth is as a goal. Many companies put customers, employees, and staying independent ahead of shareholder rewards.

Second, CEOs vary in their approach to increasing value and stock price. Many are still of the school of thought that holds "expand earnings per share and cash flow, and the market will reward you." Others, such as Frank Biondi Jr. (Viacom) or Warren Buffett (Berkshire Hathaway), take a more sophisticated approach.

Third, some CEOs are adept at driving the company forward operationally. Consider widely respected William Gates (Microsoft), Charles Harper (ConAgra), Herbert and Marion Sandler (Golden West Financial).

Fourth, some CEOs employ special strategies to maximize stock-price growth. Roberto Goizueta (Coca-Cola) divested low-return business, improved his soft drink distribution, and repurchased shares. Bob Luciano (Schering-Plough) filled the new-product pipeline with winning pharmaceutical products.

Strong management hardly guarantees investment gains. Even so, we predict that investors who buy shares of all the companies on the CEO 100 will reap gains superior to those of the S&P 500 or other major stock indexes. During the three-year period, the index's growth of 133 percent would have more than doubled the S&P.

As an alternative, you can bet on the underperforming or new CEO. Undoubtedly, some will do well, but investment success under such an approach would be more of a hit-and-miss proposition. Some best bets to crack the CEO 100: Mike Miles (Philip Morris), Stan Gault (Goodyear) and Duane Burnham (Abbott Laboratories).