Market bears argue that conglomerates tend to be formed in down cycles, when investors appreciate the value of exposure to different industries, and are broken apart at the end of periods of strong growth. With that in mind, should investors be worried United Technologies (NYSE:UTX) is splitting?
In this segment from Industry Focus: Energy, host Nick Sciple and Fool.com contributor Lou Whiteman address that question and discuss the best buys coming out of the potential split.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.
This video was recorded on June 27, 2019.
Nick Sciple: Certainly. Last question, as we see more of these companies breaking up, and the deconglomeratization trend, as you said, that's something we tend to see toward the end of the cycle. Is that something that you're concerned about, as we see this wave of companies getting split up? Or is it just something you see from time to time?
Lou Whiteman: I think that goes back to the core Fool philosophy is. You find good companies, and you stick with them. There are good companies being created here. There may be some less good companies that come out of some of these splits, or companies that appeal to other people. But for me, in DowDuPont, for me it'll be DuPont, it looks like an attractive company. I think Raytheon and United Technologies, once that comes together, that is a company -- to be honest, Raytheon to me was not a company in the defense base, I have nothing against it, but it wasn't top of my list to buy. I would be more inclined, I think, to buy this combination because of what it offers than I would have been to buy Raytheon on its own, or even United Technologies as a conglomerate on its own.
I think, regardless of where we are in the cycle, you look at the businesses. If there's a quality business being created, The Motley Fool has proven over a long time that will work out just fine for you. I think that's the case here.