Letters by Topic
Letters on Conglomerate Discount
The tendency of the market to value a diversified holding company below the sum of its parts, because investors struggle to understand the whole and fear cross-subsidization. Berkshire works to erase this discount through transparency and decentralization.
1986·Earning a fair valuation for a diversified whole
We work to have each subsidiary measured on its own merits, so the whole is fairly valued rather than discounted for complexity.
1995·Transparency as an antidote to the discount
Decentralization and candor help investors value the pieces, narrowing the discount a conglomerate usually suffers.
Explore the concept
Conglomerate Discount is one of the ideas behind the ValueOS tools. See it applied to real companies.