The Simple Reason I Won't Buy Intrexon

"Complexity" is one of the most adequate words that can be used to describe synthetic biology conglomerate Intrexon (NYSE: XON). The company's management team, Wall Street analysts, and even individual investors often consider it to be a major long-term advantage. Who needs to understand the ins and outs of a company that stretches into biopharma, energy, livestock, agriculture, public health, and even pet cloning? Surely there are big wins in there somewhere, right?

But complexity works both ways. In rare cases, it can hide dangerous transactions (see: Valeant Pharmaceuticals, Ocwen Financial, SunEdison). More commonly, complexity can be used as an excuse when faced with difficult questions, to which the answer is always something related to "we're building something truly disruptive that no one understands!" Surely, the company saying that will be led by intelligent experts who do understand it, right?

Here's the problem. When investors begin to accept management's complexity excuse, they may stop asking serious questions or looking into red flags hiding in plain sight. It can happen to individual investors and the world's most successful investors (see: Valeant Pharmaceuticals, Ocwen Financial, SunEdison). It's an Achilles' heel that Ritholtz Wealth Management CEO Josh Brown calls "a love of complexity for complexity's sake."

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Source: Fool.com