|Seek out superior businesses with
- Durable, predictable, high return on invested capital and free cash flow
- Identifiable, sustainable competitive advantages
- Easy to understand
- Have strong sustainable pricing power
- Strong balance sheets
- How likely will the moat be intact in 10 years?
- Is the product or service a good deal from the customer’s point of view?
|Extensive opportunities to reinvest
free cash flow organically or
- Pattern of discipline reinvestment that generates compelling compounded growth
|Highly skilled managers who treat
their shareholders as partners:
- Pursue highest return on incremental dollar invested
- Exceptional skill, integrity and passion
- Indifferent to Wall Street’s short-term focus
- Lean corporate culture fosters independence accountability
- Capital allocation: Does management thoughtfully weigh dividends, buybacks, mergers and acquisitions, and debt repayment?