Sony landed at the 6th spot on our list of the biggest tech companies in the world in 2020. We all know Sony as the manufacturer of PS5, as well as a variety of games and software. Sony is also involved in the production, acquisition, and distribution of motion pictures and television programming and the operation of television and digital networks. Sony distributes electronic products directly to retailers and manufacturers.

We posted an article where Third Point stated why Sony is a good match for your portfolio:

“We invested in Sony in Q1 2019 when shares traded down on market fears that cloud gaming posed a substantial threat to the company’s PlayStation franchise and overall gaming business. While the market saw only risks, we saw an incredible collection of media assets: the world’s largest video game platform, a top-three music label, and a top-five Hollywood film studio. Hidden behind the media empire was an underappreciated, best-in-class semiconductor business. We also saw a capable management team open to improving shareholder value and willing to listen to our suggestions about how the company could reach its full potential.

As is often the case with conglomerates, concerns over a single business impaired total value, giving us the opportunity to purchase shares at a large discount to our view of intrinsic valuation. The rest of 2019 proved excellent for Sony. Fears around cloud gaming were overblown. Sony’s semiconductor business has grown from ~15% of profits to ~25% and analysts expect semis to be a core driver of Sony’s growth going forward. Gaming profits were down only slightly ahead of a major product launch this holiday season, the PS5, after which most analysts expect Sony gaming to return to growth.

While business performance has been stellar, we believe true value maximization at Sony is only beginning. Out of Sony’s four major non-core publicly-listed stakes, the company has divested only one of its smallest, Olympus. Sony has yet to outline a clear strategy for its remaining ~$14 billion in public stakes, largely concentrated between Sony Financial and M3 but has indicated that it will do so. Sony has avoided the topic of portfolio optimization, but we continue to believe that Sony’s media and semiconductors franchises can stand alone and create more value independently than together.”