The wonder is that it didn’t happen sooner. Diversified conglomerates were a niche business structure that got hot in the 1960s on the theory that wisely chosen but unrelated companies would wax and wane at different times. The parent company would thus ride a smooth upward trajectory, and investors would pay a premium for the stock. 

But it didn’t work out that way. If investors wanted a diversified portfolio, they could build their own, buying and selling single-business stocks as they wished. By contrast, conglomerates locked investors into a portfolio which included businesses that they may not have liked. Instead of selling at a premium over the sum of the parts, some conglomerate stocks sold at a discount.

Yet the conglomerate mystique carried on for decades, in large part because of General Electric, arguably America’s most revered company. In 1980, Fortune asked the Fortune 500 CEOs which company they admired most, and the winner was GE—a decidedly diversified conglomerate that had expanded into guided missiles, computers, uranium mining, and much else. Its stock had languished through the 1970s, But then that was a tough decade for everyone. 

At that same time, 1980, a company then called Allied, later called Allied Signal, now called Honeywell, started to become a mini-GE. For the following 36 years, its CEOs were all high-performing ex-GE executives (Edward Hennessy 1980 – 1992, Larry Bossidy 1992 – 2002 except for a 14-month hiatus, David Cote 2002 – 2016). And they diversified vigorously; when the company merged with Honeywell, it took that name. For long stretches the company performed well. For other stretches it didn’t.

In recent years the anti-conglomerate view has built momentum among high-profile companies.  GE, Alcoa, United Technologies, and Danaher have all broken themselves up. Now that the club includes Honeywell, a component of the Dow Jones Industrial Average, maybe the end is near.  

But wait—what about Jack Welch, the GE chief of 20 years who spectacularly outperformed the S&P 500? For that matter, what about Warren Buffett? His company, Berkshire Hathaway, owns a brick maker, a TV station, a jewelry retailer, and dozens more unrelated businesses. In 2015 he proudly declared, “Berkshire is now a sprawling conglomerate, constantly trying to sprawl further.” Don’t those examples show that conglomerates can work well? 

For investors, the answer is clear. Even diversified conglomerates can be great investments if they’re run by geniuses—but not if they’re run by anybody else. — Geoff Colvin

More news below.

Contact CEO Daily via Diane Brady, diane.brady@fortune.com, LinkedIn.

Top news

U.S.-Russia meeting Tuesday: Senior officials from the U.S. and Russia will discuss a peace plan in Saudi Arabia tomorrow. Ukraine is not invited to the talks — which is a problem because Ukraine is unlikely to accept a peace deal brokered without it. European officials are meeting today, to discuss ramping up military efforts in Ukraine. The UK has already committed to sending troops to Ukraine.

Republicans want judges impeached. President Trump’s supporters in Congress want to remove two federal judges who have blocked some of Trump’s executive actions. Although the move is a longshot, it’s clear Trump regards judicial checks and balances as a problem. “Maybe we have to look at the judges because I think that's a very serious violation," he said. Trump also quoted Napoleon yesterday.

Elon Musk targets Social Security and the IRS. DOGE has access to social security payment systems that connect with the Treasury. DOGE is also set to start looking at “sensitive” taxpayer data at the IRS.

Buffet stopped selling Apple stock. Here’s a look at the most recent investment moves made by Berkshire Hathaway, courtesy of Saxo. 

James Murdoch speaks. In a must-read interview, the estranged son of Rupert Murdoch describes the bitter war inside the family.

From Fortune

Palantir execs call out Silicon Valley
Two executives from data-mining software company Palantir criticized Silicon Valley for prioritizing “social-media platforms and food-delivery apps” instead of combatting national and societal issues. The rebukes from CEO Alex Karp and Nicholas Zamiska, head of corporate affairs and legal counsel to the office of the CEO, came in the form of an op-ed in the Atlantic that previews the duo’s upcoming book, The Technological Republic. Fortune

JPMorgan employee’s RTO debacle
A JPMorgan Chase employee who publicly criticized the bank’s return to office mandate told Fortune that he was fired for his stance before being told he could stay at the bank. Nicholas Welch, who works in tech ops for the bank, spoke up during a town hall with CEO Jamie Dimon and argued that a five-day return to office schedule wouldn’t make sense for his geographically diverse team. Fortune

Report on OpenAI whistleblower’s death released
The San Francisco police and medical examiners released a report on Friday officially ruling that the death of OpenAI whistleblower Suchir Balaji was a result of suicide. The 26-year-old’s parents have maintained that their son was murdered and sued the police for a full report late last month. Fortune

The markets

• The S&P 500 closed flat on Friday at 6,114.63 but futures were perking up 0.2% this morning … U.S. markets are closed today … Europe, the UK and Asia were all looking up this morning … Bitcoin was sitting at $96.2K this morning.

From the analysts

• UBS on tariffs: Trump’s plan “turned out to be a plan to investigate taxing US consumers at a future date. Markets had to decide whether the president was being a protectionist or a pushover, and for now are erring toward pushover. The delay is seen as an opportunity to do ‘deals’. So far, such deals have been more spin than substance,” per Paul Donovan.
• JP Morgan on trade: “...it is clear that a new global trade conflict has started. A widely established body of economic literature sees tariff hikes as a tax on US consumers that also promotes an inefficient allocation of resources globally. Model estimates uniformly show negative growth impulses from tariffs, while empirical studies of the 2018-19 US trade war conclude that the tariff costs were borne primarily by US consumers and that this depressed both US and global growth,” per Bruce Kasman and team.
• Wedbush on Apple’s AI: “...we estimate roughly 25% of the world's population will eventually access AI through an Apple device over the next few years,” per Daniel Ives et al.

Around the watercooler