Although Charles and David Koch are much better known for their political positions and activities, they are also the owners of one of America’s largest business conglomerates.
Since it was founded by Fred Koch in 1940, the family-owned company has become a business empire of incredible size and scope. Today, Koch Industries spans multiple sectors of the economy and does business around the world.
Investors, however, have never been given the opportunity to profit from the Koch family’s remarkable business acumen. Even though it is one of the largest companies in the United States, Koch Industries has remained in private hands since its inception and gives every indication of continuing as a private company for the foreseeable future.
Here’s what you need to know about Koch’s holdings, why the company continues to remain private and what publicly traded companies represent good alternatives for investors.
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The Koch Industries Empire Uncovered
Koch Industries is a large conglomerate with a focus on the manufacturing and petroleum businesses.
Koch counts divisions dedicated to petrochemical processing, mineral extraction, ranching and logging among its portfolio of industrial holdings. Aside from the extraction and processing of raw materials, Koch Industries is also heavily engaged in the world of financial trading and business development.
Although the conglomerate focuses heavily on raw materials, it is also the force behind several brands with which most consumers are familiar.
Through Georgia Pacific, a paper goods manufacturer acquired by Koch Industries in 2005, the conglomerate owns such household brands as Dixie paper cups and Brawny paper towels.
Invista, a 2004 acquisition, also gave Koch control of the popular Stainmaster carpet brand.
Thanks to its many holdings and long history, Koch Industries is currently the second-largest company under private control in America today, with only the agriculture-focused Cargill conglomerate having larger revenues without offering public shares.
Today, Koch Industries brings in annual revenues of approximately $110 billion and employs a global workforce of some 60,000 workers across its various business holdings.
Why Can’t You Buy Koch Industries Stock?
As mentioned above, Koch Industries is a privately owned company and so does not trade on any stock exchanges.
The business also has a history of keeping its internal operations guarded against the view of the general public, making it unlikely that it will ever pursue an IPO.
Unfortunately, that means you can’t enter in a Koch Industries ticker symbol to your thinkorswim or tastyworks accounts and buy shares.
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Best Publicly Traded Koch Industries Alternatives
Fortunately for investors, there are many publicly traded companies that can stand in as alternatives to various parts of the Koch portfolio.
Oil Sector Alternatives
In the oil sector, the two obvious choices for investors are Exxon Mobile and Royal Dutch Shell. Both of these companies are widely seen as strong assets for dividend income, as both offer yields of over 4.5 percent.
Buying shares of British Petroleum may also be a good approach for gaining broad energy sector exposure in your portfolio, as the company is involved in oil production, solar energy projects and petrochemical manufacturing.
Paper Products Alternative
If your tastes as an investor incline more to the paper products side of Koch’s holdings, International Paper may be an appealing alternative. Although the company’s share prices have been depressed since April due to slowing demand for cardboard products, International Paper is widely regarded as a solid, stable company that is under a good management team.
As with the petroleum portion of the Koch Industries portfolio, there are several large, well-known companies that can be used as alternatives for the conglomerate’s holdings in the mining industry.
For exposure to gold mining, you may want to consider K92 Mining or Wheaton Precious Metals. For holdings that offer more exposure to industrial metals, shares of Glencore or BHP Billiton may be more appropriate choices.
Chemical Holdings Alternatives
To mirror Koch’s chemical holdings, investors can look to a wide variety of publicly traded chemical processing companies.
Large firms in this space include DowDuPont, H.B. Fuller and Albemarle. The latter of these three presents a unique opportunity for investors seeking exposure to emerging alternative energy technologies, as it is the largest single producer of the lithium metal used in modern high-capacity batteries.
When and Why to Buy Manufacturing and Petroleum Stocks
Heavy industrial and manufacturing stocks may not be as exciting or innovative as shares of up-and-coming tech firms, but they can offer investors considerable earnings opportunities.
When the American economy is growing and performing well, heavy industrial stocks tend to show similar success due to the greater need for manufactured goods.
Raw materials stocks are also popular choices for investors due to their relatively high dividend yields. If you’re looking for stocks that will produce reliable cash flows, mining and petroleum shares are historically sound choices.
These shares also have a reasonable level of stability, as raw materials are foundational to every other industry and there is always a certain demand for materials needed to power the rest of the economy.
So, even though your portfolio will likely never include Koch Industries itself, there are ample opportunities to mirror Koch’s holdings with other stocks in various sectors. As always, be sure to thoroughly research each stock you decide to buy to ensure it is a good fit for your personal investing strategy and portfolio.
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