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A week does not go by now without news of another conglomerate announcing a split up - Daimler (DDAIF) (DMLRY) hiving off its truck group, General Electric (NYSE:GE) separating its healthcare and energy
GE - When Conglomerates Split, Find The Trending Oligopolists
Summary
- Although the trend started a while back, we are seeing a significant surge in the number of major conglomerates splitting up.
- Their directors and management believe they cannot maintain their edge hamstrung by monolithic, one-company leadership.
- Alpha-level investors may find opportunity in component units that are oligopolists able to capitalize on major developing trends.
- GE may be a case in point as economic recovery and the need to address climate change spur demand for its grid and aviation businesses.
Now retired after forty years in financial services: a) analyzing corporate, bank, and sovereign risk, b) predicting bankruptcies and conducting commercial workouts, restructurings, and dissolutions, c) financing grain, soft commodities, oil, and the precious metal trade internationally, d) overseeing interbank finance and arbitrage, e) modeling and assessing the productivity of financial business units, f) directing aspects of M&A due diligence and post-acquisition integrations, g) serving as Chief Information Officer of a major full-service broker-dealer, h) consulting including as interim management to global banks, investment advisors, trust companies, and alternative investment / hedge funds, and i) serving as managing general partner of a family farm. An MBA, educated in economics (with honors / distinction), and a near minor in math, who held various securities industry licenses including Series 7, 63, 24, and 14 (all now expired). A donor and volunteer now focused on: a) public works restoration projects, b) helping motivated, first-in-family, degree and certificate-bound kids achieve their education, c) advocating for nickel mining in Minnesota, and d) campaigning for, and advising, local and state elected officials. Formerly, an advisory board member of The Trust for Public Land involved with park and conservation projects including creating the first piece of a 10,000-acre metro wildlife area, and a produce farm in a distressed inner-city neighborhood. (All my proceeds from writing on Seeking Alpha go to charity.) Like I do when investing, always do your own due diligence in consultation with a licensed and competent financial/investment advisor(s) who puts your interests ahead of their own; if you don't have one, find one.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of GE, DMLRY, TOSYY, MRK, SIEGY, CTVA, HTHIY, RTX, VLVLY, VWAGY, TM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Like I do when investing, always do your own due diligence in consultation with a licensed and competent financial/investment advisor(s) who understand your unique needs and puts your interests ahead of their own. Remember, there are added considerations in owning foreign securities including those associated with ADR sponsorship, buying and selling the pinks, foreign withholding taxes on dividends, and higher fees. (All my proceeds from contributing to SA go to charity.)
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