Personally, I want capital markets that are dynamic enough that some fraction of $n00 billion businesses become $(n-k)00 billion businesses (check out the aggregate market cap today of GE’s progeny).
I’m not even sure there’s a counterfactual world where GE is a $m trillion business: The global economy has largely evolved beyond these massive, diverse conglomerates, and likely all to the good.
What does a “wow, GE really has been managed wonderfully since 1980” story even look like? I imagine they split up much earlier, each spinoff establishes their own brand, and there’s no “GE” to talk about.
I think GE is a tragic story in that they painfully and successfully navigated the transition from legacy giant manufacturer to the global economy, but overdid it.
Growing up in an area with a big presence (one of their division HQ), I did alot of early career business with them. They were shady everything was purchased with weird leasing agreements with themselves, etc.
The business strategy was good, but the demands to return growth powered by financial engineering ultimately killed the company.
There's an alternative world where they didn't focus so much on financing and GE Capital. You make a good point that they still would have a diverse set of businesses that would be hard/awkward to build in parallel.
A well-run conglomerate from an investor's perspective is more like a broad mutual fund than a single hot stock.
It's not likely to pop 800% tomorrow, but it's more likely to produce reliable long-term value because it's pre-diversified.
For some reason, the Asian kerietsu/chaebol conglomerates seem to be able to handle it well. Nobody would deny Hyundai or Sony being hugely successful as conglomerates.
Capital markets do these kinds of spin-offs regularly.
Problem is usually these spin-offs happen because it becomes clear the parent org has been doing something nasty that's going to create tons of legal liability, and the spin-off is really protecting the parent from lawsuits.
DuPont is in the news recently with how they did this with PFAS pollution. Sure, sue the "PFAS company" into oblivion, but thankfully the PFAS polluter is no longer DuPont or DuPont investors. Not DuPont's problem that Teflon pan sales can't make up for the costs of all the associated environmental cleanup.
This happens frequently with pharma companies when internal testing shows there might be some long-term side-effects before it becomes clear in public studies. I think I remember hearing this playbook was used with asbestos back in the day.
I’m not even sure there’s a counterfactual world where GE is a $m trillion business: The global economy has largely evolved beyond these massive, diverse conglomerates, and likely all to the good.
What does a “wow, GE really has been managed wonderfully since 1980” story even look like? I imagine they split up much earlier, each spinoff establishes their own brand, and there’s no “GE” to talk about.