DORSEY on MOAT INVESTING
Moats: http://www.youtube.com/watch?v=ptIGzhgIE3o
- Customer switching costs: A customer would have to take a lot of time or money to switch like Microsoft’s Office Software.
- Network effect: credit cards which benefit by increasing units. Ebay.
- 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.
- Intangible assets-brands, regulatory approvals, patents-that provide pricing power.
How management affects moats: http://www.youtube.com/watch?v=bQkcT0hSzY0&feature=relmfu
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: http://www.youtube.com/watch?v=kTw7by4Z8As&feature=related
Annual report forensics: http://www.youtube.com/watch?v=_hg1MEltp58&feature=relmfu
Buffett’s Criteria for Investments
How Buffett identifies a good investment: http://www.youtube.com/watch?v=14SK4CX_KYY
Buffett says, “Throw at my head”: http://www.youtube.com/watch?v=2a9Lx9J8uSs&feature=related 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
http://brooklyninvestor.blogspot.com/2011/09/directory-of-posts-on-ideas.html A value investor who seeks the nooks and crannies of the market. Some excellent articles found here.
http://www.marketfolly.com/2012/05/notes-from-ira-sohn-conference.html