CHAPTER 13

Superior Businesses with Lower Valuations

Industrial conglomerates are often misunderstood and underappreciated. While they frequently report their financial results within four or five different segments, they may operate multiple independent businesses within a given segment. Although industrial conglomerates will occasionally spin off one or more segments into its own separately traded company, many of the underlying businesses within an industrial conglomerate would be too small to exist as public companies on their own.

Industrial conglomerates effectively serve as holding companies that allow people to invest in a variety of industrial assets that would not otherwise be available to public investors. These collections of businesses ...

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