Buffett’s Three Categories of Returns on Capital

Posted on 16 CommentsPosted in Uncategorized

“A truly great business must have an enduring “moat” that protects excellent returns on invested capital.” –Warren Buffett, 2007 Shareholder Letter A reader recently sent me the following clips from the 2007 Shareholder Letter that pertains to a topic that we’ve discussed quite a bit here: the concept of return on capital, why it’s important, and how to think about it. For those interested, you could review all the previous posts on the concept of ROIC here. Basically, I just […]

New BHI Research Site

Posted on Leave a commentPosted in General Thoughts

My good friend and fellow investment manager Matt Brice and I have decided to start a subscription-based sister site that we are calling the BHI Members Site. I’ve known Matt for a number of years now, and he and I think similarly when it comes to our approach to investing, which is focused on making a few select investments in high-quality companies that produce attractive returns on capital and, by our estimation, can continue to compound value going forward. Matt […]

Practicing a “Punch Card” Approach to Investing

Posted on 20 CommentsPosted in Investment Philosophy, Investment Quotes

John Hempton, who runs a hedge fund and writes the blog called Bronte Capital, wrote a really interesting post over the weekend on investment philosophy. He basically calls out the majority of the professional money management community for cloning Buffett in word, but not in deed. His main point: many Buffett followers talk about the “punch card” approach to investing, but very few people actually implement this approach. Here is Buffett explaining the Punch Card philosophy: “I always tell students […]

Weekend Reading and Speaking Engagement

Posted on 2 CommentsPosted in General Thoughts

I thought I’d put up a quick post with a couple articles I’m reading this weekend. But first, I wanted to mention to readers that I’ll be speaking at the MicroCap Conference in Philadelphia on October 24th. It should be a fun event with both investing strategy discussions as well as opportunities to talk with management teams of small companies about their businesses. Check out their site for more details or to register for the event. If anyone is attending […]

Two Key Checklist Items

Posted on 21 CommentsPosted in Investment Philosophy, Investment Quotes, Walter Schloss

I am not a big fan of going through specific “checklist” items one by one when evaluating an investment idea. I know this idea has gained enormous popularity in recent years, partly due to the good book The Checklist Manifesto, and partly popularized in value investing circles by Mohnish Pabrai. I respect Mohnish a lot, and I think his idea of evaluating previous investment mistakes (both his own mistakes and especially the mistakes of other great investors) is an excellent exercise. […]

A 1977 Warren Buffett Interview From the WSJ Archives

Posted on 5 CommentsPosted in Portfolio Management, Warren Buffett

Someone I’m connected with on Linkedin sent me this old article from 1977 in the Wall Street Journal on Warren Buffett. I thought I’d share it here, along with a few highlights. It’s an article I haven’t seen previously. There isn’t much new here, but I thought it was quick read with a couple passages worth commenting on. One thing I don’t recall Buffett ever describing were the pressures of money management that he felt while running his partnership. This […]

Weekend Reading: WeChat’s Huge Moat in China

Posted on 3 CommentsPosted in General Thoughts, Scratch Notes

This is just a quick post on some interesting articles I read over the weekend as I caught up on some newspaper reading. There were a couple recent pieces (one in the Economist and one in the NY Times) on WeChat, the Chinese messaging app that now boasts over 700 million users. WeChat is also generating a significant amount of revenue (unlike Facebook’s WhatsApp and Messenger apps that haven’t monetized their networks yet). WeChat is also estimated to be very profitable for its […]

Reinvestment Moat Follow Up: Capital Light Compounders

Posted on 17 CommentsPosted in Education, Investment Philosophy

This post is the second guest post by my friend Connor Leonard, in what I hope to be a somewhat regular “column” here at BHI (by regular, I mean as often as Connor decides to put the proverbial pen to paper and share his insights with us). Based on the quality of his work, he’s welcome back anytime. Connor and I live in Raleigh, NC, and get together regularly to share investment ideas. I encourage you to reach out to […]

Notes on Credit Acceptance Corp (CACC)

Posted on 21 CommentsPosted in Case Studies, Investment Ideas & Company Research, Scratch Notes, Shareholder Letters & Reports

I recently made a list of a few shareholder letters I want to read, and one that I completed a few days ago was Credit Acceptance Corp (CACC). This post is not a comprehensive review of the business, as I just started reading about the company. But I thought some readers might be interested in some initial notes. (I am thinking about putting more of these “scratch notes” up as posts. If this is interesting to readers, please let me […]

Buffett’s Investment in Dempster Mill–A Cigar Butt

Posted on 18 CommentsPosted in Case Studies, Superinvestors, Warren Buffett

I came across a case study that discusses Dempster Mill recently. I thought I’d post a brief summary of some notes I jotted down while reading it. Dempster Mill is a company that Buffett bought in the early 1960’s when operating his partnership. The company manufactured farm equipment, specifically windmills and water irrigation systems. It was a difficult business because the farm equipment it made was not much different than its competitors’ products, and because of these commodity-like economics, the […]