In praise of the long term view
There are some companies famously long term in their outlook. Warren Buffet’s Berkshire Hathaway is a famous example. Another company in the same league is Nestle. Nestle , as everyone knows, is a food company. However, the way they dealt with two pieces of their portfolio that has nothing to do with food, is very demonstrative of their long term approach. One is Alcon, an eyecare business. In 1977, Nestle acquired Alcon as part of a diversification outside their traditional food business. They bought this at that time of $280 m. Run professionally for two decades and more. In 2002, they decided to start selling it off ; so they floated 23% of the company for $33 per share. They were subject to wild criticism from the pundits for not selling off the whole company. To their credit, they didn’t listen to all the noise. Then in 2008 they sold another 25% of the stake to Novartis for $143 a share. Yesterday, Novartis bought out the balance stake for $181 per share. So bought in 1977 for $...