Most companies rejected the conglomerate business model. Once in fashion, the logic was that a company would have a division that would thrive whenever a different one was out of favor with the market. That model just created a lot of headaches for management instead.
However, there are a few surviving examples. Run properly, a conglomerate tends to be a relatively strong performer in a weak economy, but may take time to rally when an economy recovers.
That may be the case today with one of the greatest conglomerates of all time, Berkshire Hathaway (BRK-B). Run by Warren Buffett, the company is a massive operation with insurance companies, a railroad, plays on housing, and a widely-followed stock portfolio.
- This Industry is Exploding Faster Than It Has in 15 Years
1,700 people are moving to Central Florida every week.
And the numbers are only increasing as more and more people are banking the end of the pandemic drawing near.
And one company, which just received critical approval to list on a prestigious public exchange, could be on the verge of going on a huge run.
The company underperformed the S&P 500 in 2019, and is on track to do so again this year. That’s one of the company’s worst periods of underperformance. But with a stock portfolio tilting increasingly towards technology, and with dozens of wholly-owned businesses likely to improve in the coming year, shares look attractive.
Action to take: Investors interested in ownership should consider buying the B shares up to $230.
For traders betting on a rebound, the June 2021 $235 calls, which have a bid/ask spread near $11.80, offer mid-to-high double-digit returns on a rebound in the first half of next year.