Characteristics of Good Businesses

We are partial to businesses with sustainable competitive advantages, or wide "moats" as they are often called. These companies are typically leaders in industries with significant barriers to entry.

We have a preference for growing businesses that are likely to be around for a long time. We like predictably profitable companies with pricing power, diversified earnings and strong free cash flow.

We like durable businesses with healthy balance sheets and the wherewithal to withstand the inevitable shocks and rough patches. We prefer that companies have low capital investment requirements, provide above-average returns on capital and not be dependent upon external funding.

We admire well-managed companies whose leaders are disciplined in their capital allocation decisions and who display a shareholder orientation.