Buying stock in value-added companies: an alternative choice for vertical diversification?

Joshua D. Detre, Christine A. Wilson and Allan W. Gray

Agricultural Finance Review, 2007, vol. 67, issue 1, pages 175-196

Abstract: Recent research has indicated that livestock producers who want to manage risk and diversify their operations should invest in the stock market. This research evaluates whether or not a portfolio of publicly held companies that are first handlers of pork products would provide pork producers with a means of enhancing annual returns and reducing the volatility in the annual returns. Ex ante results suggest producers can gain from investment in value-added stocks. Ex post results, however, imply producers must choose active management of their portfolio to receive the same type of benefits as the ex ante portfolio.

Keywords: Investment; Risk management; Stock market; Value-added; Vertical diversification; Vertical integration (search for similar items in EconPapers)
Date: 2007

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