What makes a company "complex" from an investment perspective?

A complex company typically features intricate corporate structures, opaque financial reporting, or convoluted business models that make traditional analysis challenging. This might include firms with numerous subsidiaries, those operating across multiple unrelated industries, or companies with sophisticated financial instruments and layered investment vehicles. While this complexity makes them harder to understand, it can also create opportunities when the market undervalues them due to this very difficulty.

Why would I want to invest in complex companies?

Complex companies often trade at what investors call a "complexity discount" – meaning the market values them lower simply because they're difficult to understand. If you're willing to do deeper research or follow expert analysis, you might identify value that others miss. Additionally, when complex firms simplify their structures, spin off divisions, or become more transparent, this can trigger significant price appreciation as the market recognizes their true worth.

What are alternative asset managers?

Alternative asset managers are firms that specialize in investments outside traditional stocks and bonds. They typically manage private equity, real estate, credit, hedge funds, infrastructure, and other alternative investments. Companies like Blackstone (BX), KKR, and Carlyle Group (CG) fall into this category. They're considered complex because they operate sophisticated investment vehicles across different asset classes, often with performance fees and distribution structures that can be difficult for average investors to fully understand.

What is a Business Development Company (BDC)?

A Business Development Company (BDC) is a type of investment vehicle that invests primarily in the debt and equity of private, middle-market companies. Several stocks in this collection (like PSEC, FSK, and CCAP) are BDCs. They're considered complex because they hold portfolios of loans and investments in private companies that aren't publicly traded, making the underlying value harder to assess. BDCs typically offer high dividend yields but require understanding their portfolio quality, management's investment approach, and their fee structures.

What catalysts might unlock value in these complex companies?

Several events can trigger value recognition in complex companies. Economic pressures might force them to simplify operations or sell undervalued assets. Corporate actions like spin-offs, where a company separates a business unit into a new independent entity, often unlock value. Other catalysts include activist investor involvement, management changes, new disclosure practices that improve transparency, or strategic shifts that make the business easier to understand. During periods of market stress, these companies might make moves to raise capital by monetizing previously hidden valuable assets.

15 handpicked stocks

Complexity Kings

Navigate the maze of corporate complexity with this carefully curated collection. Our professional analysts have identified companies whose intricate structures and opaque financial reporting potentially hide significant value that the broader market may have missed.

Han Tan | Market Analyst

Published on June 17

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

KKR & Co. L.P.

KKR

Current price

$124.63

Its structure as a global investment firm with extensive and intermingled asset management, capital markets, and insurance arms creates significant fi...

Its structure as a global investment firm with extensive and intermingled asset management, capital markets, and insurance arms creates significant financial complexity.

Carlyle Group, The

Current price

$61.72

The firm operates a labyrinthine global investment model with distinct, sprawling segments in private equity, global credit, and specialized investmen...

The firm operates a labyrinthine global investment model with distinct, sprawling segments in private equity, global credit, and specialized investment solutions.

Blackstone Inc

Current price

$166.58

As a top-tier alternative asset manager, its financial statements are inherently complex, reflecting vast and layered investments across private equit...

As a top-tier alternative asset manager, its financial statements are inherently complex, reflecting vast and layered investments across private equity, real estate, and credit.

BlackRock, Inc.

BLK

Current price

$1,162.84

Brookfield Corp

Current price

$68.16

Prospect Capital Corporation

PSEC

Current price

$2.77

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

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In 12 months it might be worth:

$1,000.00

+22.60%

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About This Group of Stocks

Our Expert Thinking

We believe complexity can conceal opportunity. These companies feature labyrinthine corporate structures, convoluted financial statements, or byzantine business models that often confuse the market. This opacity can create pricing inefficiencies where substantial hidden value waits to be discovered by savvy investors.

What You Need to Know

This collection includes alternative asset managers, business development companies, and diversified holding companies known for their challenging financial presentations. While potentially rewarding, these investments require higher risk tolerance and deeper research. Consider these as satellite holdings in a diversified portfolio.

Why These Stocks

Each company was selected because its complexity is a strategic feature rather than a byproduct of scale. Current economic pressures may serve as catalysts for these firms to simplify operations or divest assets, potentially unlocking previously hidden value and presenting timely opportunities.

Group Performance Snapshot

22.6%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 22.6% over the next year.

11 of 15

Stocks Rated Buy by Analysts

11 of 15 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

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Hidden Value Waiting to Be Revealed

Current market pressures may force these complex companies to streamline operations or divest assets, potentially unlocking significant hidden value that's currently buried in their intricate structures.

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The Complexity Discount

These stocks often trade at discounts because the market struggles to fully understand their value. When you can see what others miss, you position yourself for potential outsized returns.

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Expert Territory

Most retail investors avoid these complex companies, creating less competition and more opportunity for those willing to do the deeper research. This is where professional-level insights really pay off.

Get the full story on this Basket. Read our detailed article on its risks and potential.

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