Pure Play

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DEFINITION of 'Pure Play'

A publicly traded company that is focused on only one industry or product. Pure play companies are popular with certain types of active investors who do a lot of research and want to make very specific bets on particular products or industry segments. For these investors, buying a company with several diversified business lines forces them to take risk in industries that they did not want to be invested in.

INVESTOPEDIA EXPLAINS 'Pure Play'

For some large companies, the allure of creating a pure play may make it worthwhile to spin off certain business lines or divisions into their own companies. Occasionally, the market will value the two resulting companies at a higher value than they did the original firm. This can be particularly true in hot industries and where there are few pure play companies to invest in that are already in the market.

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RELATED FAQS
  1. What are green investments?

    Green investments are traditional investment vehicles (such as stocks, exchange-traded funds and mutual funds) in which the ... Read Full Answer >>
  2. What is a pure play?

    A pure play is a company that invests its resources in only one line of business. As such, this type of stock has a performance ... Read Full Answer >>
  3. What happens to the company stock if a subsidiary gets spun off?

    When a subsidiary gets spun off, the company's stock tends to drop. However, the investor in the stock does not lose any ... Read Full Answer >>
  4. How can I use asset allocation to properly diversify my portfolio?

    Asset allocation is the process of dividing a portfolio among a number of different asset classes. Most commonly, asset allocation ... Read Full Answer >>
  5. What are some common cash-debt strategies that occur during a spinoff?

    Cash-debt strategies that are commonly used to in a spinoff to enable the parent company to monetize the spinoff are debt/equity ... Read Full Answer >>
  6. What are the tax implications for both the company and investors in a divestiture ...

    In finance, divestiture is defined as a reduction of a company's assets as a result of asset closures or the selling of business ... Read Full Answer >>
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