Money and Finance
- Safal Niveshak: Value Investing, The Sanjay Bakshi Way 2.0 – Part 2
For Part 1, which was a great overview on MOAT investing, go HERE. A big thanks to Vishal Khandelwal for doing these brilliant interviews. Link to interview: Value Investing, the Sanjay Bakshi Way 2.0 – Part 2Excerpt: As a disciple of Ben...
- Notes From A Meeting With Warren Buffett On November 15, 2013 - By Dr. David Kass
A big thanks to Peter for passing this along. My Alma Mater, Coastal Carolina University, also happened to be one of the 8 universities that attended the meeting. (11) You were the first person to use the term “moats” as competitive advantage. Morningstar...
- "if At First You Do Succeed, Quit Trying."
As re-read in the newly released third edition of Lawrence Cunningham’s The Essays of Warren Buffett: Lessons for Corporate America. This excerpt is from Warren Buffett’s 1991 shareholder letter:We continually search for large businesses with understandable,...
- "i Feel Like I'm Having A Black Tie Dinner On Top Of A Volcano"
Quote from Johann Rupert on Richemont’s Q1 conference call (May 16th):“Folks, I'm not -- they begged me, my colleagues, please don't say it, but I feel like I'm having a black tie dinner on top of a volcano, okay? That volcano is China....
- Investing In Sustainably Advantaged Businesses - Twst Interview With Larry Coats Of Oak Value
We define good businesses as those that we believe have the ability to produce predictable and growing excess cash. The predictability component is defined to a large extent by the company’s positioning relative to customers, suppliers, competitors...
Money and Finance
Warren Buffett's 2007 Shareholder Letter
Warren Buffett's 2007 Letter to the Shareholders of Berkshire Hathaway Inc.
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Excerpt:
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Let’s take a look at what kind of businesses turn us on. And while we’re at it, let’s also discuss what we wish to avoid.
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Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.
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A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the lowcost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies whose moats proved illusory and were soon crossed.
A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the lowcost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies whose moats proved illusory and were soon crossed.
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Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism’s “creative destruction” is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.
Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism’s “creative destruction” is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.
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Additionally, this criterion eliminates the business whose success depends on having a great manager. Of course, a terrific CEO is a huge asset for any enterprise, and at Berkshire we have an abundance of these managers. Their abilities have created billions of dollars of value that would never have materialized if typical CEOs had been running their businesses.
Additionally, this criterion eliminates the business whose success depends on having a great manager. Of course, a terrific CEO is a huge asset for any enterprise, and at Berkshire we have an abundance of these managers. Their abilities have created billions of dollars of value that would never have materialized if typical CEOs had been running their businesses.
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But if a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO.
But if a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO.
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Long-term competitive advantage in a stable industry is what we seek in a business. If that comes with rapid organic growth, great. But even without organic growth, such a business is rewarding. We will simply take the lush earnings of the business and use them to buy similar businesses elsewhere. There’s no rule that you have to invest money where you’ve earned it. Indeed, it’s often a mistake to do so: Truly great businesses, earning huge returns on tangible assets, can’t for any extended period reinvest a large portion of their earnings internally at high rates of return.
- Safal Niveshak: Value Investing, The Sanjay Bakshi Way 2.0 – Part 2
For Part 1, which was a great overview on MOAT investing, go HERE. A big thanks to Vishal Khandelwal for doing these brilliant interviews. Link to interview: Value Investing, the Sanjay Bakshi Way 2.0 – Part 2Excerpt: As a disciple of Ben...
- Notes From A Meeting With Warren Buffett On November 15, 2013 - By Dr. David Kass
A big thanks to Peter for passing this along. My Alma Mater, Coastal Carolina University, also happened to be one of the 8 universities that attended the meeting. (11) You were the first person to use the term “moats” as competitive advantage. Morningstar...
- "if At First You Do Succeed, Quit Trying."
As re-read in the newly released third edition of Lawrence Cunningham’s The Essays of Warren Buffett: Lessons for Corporate America. This excerpt is from Warren Buffett’s 1991 shareholder letter:We continually search for large businesses with understandable,...
- "i Feel Like I'm Having A Black Tie Dinner On Top Of A Volcano"
Quote from Johann Rupert on Richemont’s Q1 conference call (May 16th):“Folks, I'm not -- they begged me, my colleagues, please don't say it, but I feel like I'm having a black tie dinner on top of a volcano, okay? That volcano is China....
- Investing In Sustainably Advantaged Businesses - Twst Interview With Larry Coats Of Oak Value
We define good businesses as those that we believe have the ability to produce predictable and growing excess cash. The predictability component is defined to a large extent by the company’s positioning relative to customers, suppliers, competitors...