What Is a Holding Company?

Holding companies are conglomerates that own other firms. Investorwords offers a more specific definition: "A company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors. Also called parent company."

A good example is Warren Buffett's Berkshire Hathaway (NYSE: BRK.A  ) , which owns GEICO, See's Candies, Executive Jet, Dairy Queen, The Pampered Chef, and Benjamin Moore paints, 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).

Another holding company is Loews Corp. (NYSE: LTR  ) , which encompasses CNA Financial (NYSE: CNA  ) , Lorillard, Diamond Offshore Drilling (NYSE: DO  ) , Loews Hotels, Bulova Corp., and Texas Gas Transmission.

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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Longtime Fool contributor Selena Maranjian owns shares ofBerkshireHathaway.


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