Money and Finance
From Deep Value:
- Ed Chancellor On The Capital Cycle...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15, which was released in hardcover today: Typically, capital is attracted into high-return businesses and leaves when returns fall...
- 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...
- 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...
- Warren Buffett's 2007 Shareholder Letter
Warren Buffett's 2007 Letter to the Shareholders of Berkshire Hathaway Inc.************Excerpt:-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.-Charlie and I look for...
Money and Finance
What distinguishes a first-class business from an ordinary business?
From Deep Value:
In a cruel irony, most good businesses earning high returns on invested capital can’t absorb much incremental capital without reducing those high returns, while most bad businesses earning low returns on invested capital require all earnings be reinvested simply to keep up with inflation. Bad businesses that can only earn sub-par returns destroy capital until they are liquidated. The sooner the business is liquidated, the more value that can be salvaged. The longer the good business can maintain a high return on invested capital, the more valuable the business. What then distinguishes the first-class business from the ordinary business? The differentiator is not simply high returns on capital, which, as Graham pointed out, even an ordinary business will earn at some point in the business cycle, but sustainable high returns on capital throughout successive business cycles. The sustainability of high returns depends on the business possessing good economics protected by an enduring competitive advantage, or what Buffett describes as “economic castles protected by unbreachable ‘moats.’”
- Ed Chancellor On The Capital Cycle...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15, which was released in hardcover today: Typically, capital is attracted into high-return businesses and leaves when returns fall...
- 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...
- 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...
- Warren Buffett's 2007 Shareholder Letter
Warren Buffett's 2007 Letter to the Shareholders of Berkshire Hathaway Inc.************Excerpt:-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.-Charlie and I look for...