The quest to find companies that have a lasting competitive edge

acquired Berkshire Hathaway, a textile company based in New England, for his investment partnership. When he began buying the stock, in 1962, Berkshire had working capital worth $16 a share; the shares sold for $8. So Mr Buffett was getting the rest of the firm’s assets for less than nothing. This was the sort of “value investing” that had made Mr Buffett and his partners a tidy pile over the preceding decade.

In its way, Berkshire provided a valuable lesson. Mr Buffett’s strategy shifted. Instead of “buying fair companies at wonderful prices”, he would buy “wonderful companies at fair prices”. To make the grade, a firm must have a lucrative position in the marketplace. But it needs more. To be a truly great investment, the company should also have a “moat”.

Looking back, Mr Buffett has invested in firms with two sorts of moat. The first type operates in a market that has room for just one profitable firm. In the 1970s Mr Buffett’s monopoly of choice was citywide newspapers, which had a lock on advertising., America’s largest freight railway, which Berkshire has owned outright since 2009, is a more recent example. The moat’s contours are not as clear for the second type. The firm has competitors.

With hindsight, Coke, Gillette and the rest look like sure-fire winners. That Berkshire made losing bets on firms with apparently unbreachable moats shows the difficulty of foresight. An example was Tesco, a British grocery chain. It was the leading firm in an oligopoly—a classic Buffett play. But after it issued several profit warnings, Berkshire sold at a hefty loss in 2014. Other moats are springing leaks.

Rhetorical nonsense. So much for the sage of Nebraska. This is investment wisdom, is it?

WarrenBuffett IMO some of his meat, junk food /soda investments did not work so well, right ? Like to see Organic Vegetables/Fruits Greenhouses w/ solarenergy desalination all along US-MX 2000 mile Border , is anyone doing it ?

same

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