THIS STRATEGY IS UP 100% OVER THE S&P IN THE LAST 10 YEARS

摘要

Back in the 1960s conglomerates were all the rage. These large companies encompassing multiple diverse businesses were thought of as strong investments because they had the ability to withstand cyclical weakness in one or more of the sectors represented by one of its business lines and still produce positive returns. The case for conglomerates is an old and simple one: Diversification. However, this diversification often comes at a cost. Joe Cornell founder and CEO of Spin-Off Advisors (spinoffresearch.com) writes, "The market often applies a haircut to the value of widely diversified companies. Frequently, conglomerates trade at a discount to more focused companies. The conglomerate discount gives investors a good idea of how the market values the conglomerate as compared to the sum value of its various parts."