An Exercise on Thinking Differently and a Great Business

Posted on 15 CommentsPosted in Case Studies, Investment Ideas & Company Research, Think Differently

I came across an excellent presentation that I wanted to share because it sparked some thoughts. It is not about a current—or even prospective—investment, but one that exemplifies the art of thinking differently. I spend a fair amount of time reading annual reports about businesses that I have no intention of owning. Typically, these businesses are high quality companies that—although maybe too expensive to offer attractive investor returns—are great entities to study and learn about. Studying businesses that have a […]

1987 Berkshire Letter and Buffett’s Thoughts on High ROE

Posted on 25 CommentsPosted in Education, How to Improve Results, Warren Buffett

I am in the midst of writing a few posts on the importance of Return on Invested Capital (ROIC). I wrote two posts last week discussing Greenblatt’s formula and some thoughts on the topic (Here and Here). I’ll have one or two more posts next week discussing a few brief examples of compounders (companies that exhibit unusually high returns on capital over extended periods of time, allowing them to grow–or “compound”–shareholder value over long periods of time). There always seems […]

Thoughts On Return On Capital And Greenblatt’s Magic Formula Part 2

Posted on 26 CommentsPosted in Investment Philosophy, Joel Greenblatt, Superinvestors, Warren Buffett

In part 1 of this post, I mentioned I caught a video interview with Joel Greenblatt at Morningstar. In the video, Greenblatt talks about indexing, and things that are not necessarily interesting to me and my investment strategy, but he also had some brief comments on Return on Capital. In the last post, I discussed the basic method that Joel Greenblatt uses to define Return on Capital. I also discuss some of the fundamentals and the importance of this key […]

Thoughts on Return on Capital and Greenblatt’s Magic Formula Part 1

Posted on 55 CommentsPosted in General Thoughts, Investment Philosophy, Joel Greenblatt, Superinvestors, Warren Buffett

I recently watched a video of Joel Greenblatt with Morningstar. Most of the video discusses the index approach to investing using a value weight (as opposed to equal weight or market weight, which most indexes use). I’m not that interested in indexing, although for individuals who want completely passive exposure to stocks, value weighting certainly makes much more sense to me than market weighting (because market weighting systematically buys more of a stock as it goes up, thus forcing you […]