Understanding conglomerates – A simple walkthrough
According to Investopedia.com, a conglomerate is …
“A corporation that is made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies, which conduct business separately. Each of a conglomerate’s subsidiary businesses runs independently of the other business divisions, but the subsidiaries’ management reports to senior management at the parent company.”
Do you currently own shares in a conglomerate, or are you intending to invest in one?
One of the challenges in determining whether a conglomerate is a worthwhile investment is figuring out how to value its businesses, since these businesses could run independently.
Because I attended the Boustead EGM and Wilmar AGM recently, I decided to shoot a quick video to share with you my own thought process when it comes to evaluating a conglomerate.
Do you think this is useful? What other aspects would you consider if you are doing the evaluation on your own?
Do leave me your comments below, I’d love to hear from you.
“Please note that the material here is provided to you for general information and illustrative purposes only, or as descriptive case studies on how our value-investing principles may be applied. It is not intended to be and should not be construed as any form of general or specific financial advice. For the avoidance of doubt, we do not recommend or provide opinions on how or what you should or should not be investing in, and you should always do your own research and independent assessment before making any investment decisions, taking into account your own specific circumstances. If you require any financial advice on investments or any other financial matters, please consult the relevant professional financial advisers.”