Outstanding businesses
- are understandable
- have strong balance sheet
- have good economics (i.e., free cash flow that will grow, pricing power, high return on equity, and bright prospects)
- have competitive advantages
Competent management
- capable management
- rational capital allocators
- appropriate incentives
- a shareholder orientation
- share ownership by management
Great price
- companies that trade at 75 percent or less of economic value
- competitor analysis
- multiple comparisons
- present value of future owner earnings
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