Money and Finance
From Warren Buffett's 1991 Letter to Shareholders:
- The Truly Exceptional Business...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:The truly exceptional business can operate with little capital. When U.S. securities markets function normally, most healthy businesses have no trouble...
- Competitive Forces And Competitive Advantages...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: If a company is earning far in excess of its cost of capital, it is likely to attract competition. Competitive forces chip away at economic margins in...
- Seth Klarman Ebitda Example
From Margin of Safety:EBITDA Analysis Obscures the Difference between Good and Bad BusinessesEBITDA, in addition to being a flawed measure of cash flow, also masks the relative importance of the several components of corporate cash flow. Pretax earnings...
- Gurufocus Interview With Prof. Bruce Greenwald
Back to your comment, what’s the best way, do you think, to distinguish the ones that are temporarily sick from the ones that are terminally ill?The first judgment that you have to make is that is it a franchise business or is it not. And the reason...
- Will United Parcel Service, Inc. Continue To Deliver The Dividends?
United Parcel Service (NYSE:UPS) is a dividend contender with 6 consecutive years of dividend growth. The company generate revenues through both delivery of goods and supply chain management. Its vast network gives it an advantage for companies looking...
Money and Finance
The difference between a franchise and "a business"...
From Warren Buffett's 1991 Letter to Shareholders:
An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject to price regulation. The existence of all three conditions will be demonstrated by a company's ability to regularly price its product or service aggressively and thereby to earn high rates of return on capital. Moreover, franchises can tolerate mis-management. Inept managers may diminish a franchise's profitability, but they cannot inflict mortal damage.
In contrast, "a business" earns exceptional profits only if it is the low-cost operator or if supply of its product or service is tight. Tightness in supply usually does not last long. With superior management, a company may maintain its status as a low-cost operator for a much longer time, but even then unceasingly faces the possibility of competitive attack. And a business, unlike a franchise, can be killed by poor management.
- The Truly Exceptional Business...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:The truly exceptional business can operate with little capital. When U.S. securities markets function normally, most healthy businesses have no trouble...
- Competitive Forces And Competitive Advantages...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: If a company is earning far in excess of its cost of capital, it is likely to attract competition. Competitive forces chip away at economic margins in...
- Seth Klarman Ebitda Example
From Margin of Safety:EBITDA Analysis Obscures the Difference between Good and Bad BusinessesEBITDA, in addition to being a flawed measure of cash flow, also masks the relative importance of the several components of corporate cash flow. Pretax earnings...
- Gurufocus Interview With Prof. Bruce Greenwald
Back to your comment, what’s the best way, do you think, to distinguish the ones that are temporarily sick from the ones that are terminally ill?The first judgment that you have to make is that is it a franchise business or is it not. And the reason...
- Will United Parcel Service, Inc. Continue To Deliver The Dividends?
United Parcel Service (NYSE:UPS) is a dividend contender with 6 consecutive years of dividend growth. The company generate revenues through both delivery of goods and supply chain management. Its vast network gives it an advantage for companies looking...