Concentrated Diversity Over Grab-Bag Portfolios

"Their guiding principle was concentrated diversity — make primary investments in a limited number of different industrial and commercial sectors. Future purchases would be made with an eye to how they could complement and be integrated into the existing holdings. This was diametric to Power’s previous grab-bag approach to investment, which was to hold onto investments collected over 50 years simply because they were investments, no matter their performance."

"lish significant and controlling, long-term investments in a small num¬ ber of companies that showed potential for great growth and profit. The companies had to show the potential to become leaders in their industries, and Power was to take an active advisory and managerial position in each."

"Power was in the strange situation of being a valuable business, with valuable holdings, but low cash flow; it was asset rich and cash poor, with huge amounts in investments that weren’t paying off. It had slid into the worst position a holding company could occupy — holding a very diversified investment portfolio, with large investments in companies it didn’t control. Power was at the mercy of the man¬ agements of these companies, managements who were not able to meet changing market demands."