Pat Dorsey and Buffett on Moat Investing; Great Blogs



  1. Customer switching costs: A customer would have to take a lot of time or money to switch like Microsoft’s Office Software.
  2. Network effect: credit cards which benefit by increasing units. Ebay.
  3. Cost advantages: A low cost producer. Process based cost advantages like Dell’s build to order are not as durable. Scale based cost advantage like UBS with a dense network of vans and shipping points.
  4. Intangible assets-brands, regulatory approvals, patents-that provide pricing power.

How management affects moats:

It is better to invest in a great business. Common attributes of management teams that have built or destroyed competitive advantages.  A view of businesses along the commoditization spectrum–Oil service businesses to Disney.  Management has more influence on a commoditized business. Ask whether management understands what drives the moat.

Wal-Mart’s laser-focus on low price.

Strayer Education—has a focus on educational quality. Focus on key metrics of the business.

Always widen the moat. Don’t deworsify. ADP’s bad acquisitions.

Value or Value Trap:

Annual report forensics:

Buffett’s Criteria for Investments

How Buffett identifies a good investment:

Buffett says, “Throw at my head”:  What Buffett looks for in an investment–the chewing gum market. I want to know about what the economics of the business will look like in ten years.

Great Blogs  A value investor who seeks the nooks and crannies of the market. Some excellent articles found here.

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