What's a Holding Company?

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By Selena Maranjian (TMF Selena)
June 2, 2003

Q. What's a holding company?

A. A holding company is a conglomerate that owns the securities of other firms. It usually maintains voting control over these companies as well. A good example is Warren Buffett's Berkshire Hathaway (NYSE: BRK.A), which owns GEICO, See's Candies, Executive Jet, The Pampered Chef, Clayton Homes, and Dexter Shoe Company, among many other businesses.

Another major holding company is Fortune Brands (NYSE: FO), which owns companies making distilled spirits (Jim Beam, DeKuyper, Ronrico), golf equipment (Titleist, Cobra, FootJoy, Pinnacle), home products (Moen faucets, Aristokraft and Schrock cabinets, and Master Lock padlocks), and office products (ACCO, Day-Timers, Swingline).

While many companies routinely gobble up other companies, they frequently aim to blend these acquisitions into their operations. Holding companies keep the businesses they buy more separate.

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This question and answer is adapted from The Motley Fool Money Guide: Answers to Your Questions About Saving, Spending and Investing. For answers to this and 499 other common money questions, check it out -- it's a handy resource.