Finding economic moats is a critical process in value investing.
Consider the following briefs:
1) Nature of business
2) Low debt
3) Good management
4) Innovation
5) Known products which sell well (include Branding)
6) Barriers to entry
7) Investment in capex and R&D
8) Business focus
Can business cycles be consider? such as properties play, shipping, etc.
Is the above order of importance correct or Good Management should comes first above all?
Appreciate all comments.
(24-08-2012, 10:48 AM)edragon Wrote: [ -> ]Finding economic moats is a critical process in value investing.
Consider the following briefs:
1) Nature of business
2) Low debt
3) Good management
4) Innovation
5) Known products which sell well (include Branding)
6) Barriers to entry
7) Investment in capex and R&D
8) Business focus
Can business cycles be consider? such as properties play, shipping, etc.
Is the above order of importance correct or Good Management should comes first above all?
Appreciate all comments.
Most of my shares in my portfolio have no moat and probably the most important criteria for me is good management. But, if the PE is low or NTA is low as compare with market value, I am willing to accept a mediocre management.
Other than that, I hardly look out for
innovation(I accept dumb businesses)
business focus(if they can make money in other areas, why not)
low debt(property companies, construction companies, distributors use lots of debt)
Known products which sell well(well, if they sell enough to make a good profit, even they are second, third or even no. 10 in the product list, i am ok..)
Barriers to entry(hard to find at acceptable share price, all are selling at high PE)
Investment in capex and R&D(can earn money can liao, no R&D is also ok)
In other word, I accept anything that can give me a reasonable return at the point of purchase(10% per annum??)
Low debt its good financial practice but doubt its a competitive edge. even low cost is not unless they have a advantage resulting in them ALWAYS being lower than competitors e.g. producing palm oil is cheaper in malaysia farm land than anywhere in the world
innovation - competitors can always clone. hence the war u see between apple and samsung
Yeokiwi, what do u look out for in the management?
how to find investment return >10% every year?
(24-08-2012, 07:03 PM)pianist Wrote: [ -> ]how to find investment return >10% every year?
Below similar to your comments.
I remember one radio interview of a HK properties billionaire many years ago. It goes like this:-
Interviewer: "What is the secret of your success in properties?"
Billionaire: "I will buy any properties anywhere (in HK) in any condition as long as the property gives me a return of
17% per annum".
(24-08-2012, 07:03 PM)pianist Wrote: [ -> ]how to find investment return >10% every year?
Any stock with a PE < 10 is a possible candidate.
For growth stocks, the PE can be higher.
There are plenty in SGX to choose from. Eg. Kingsmen?
Neratel before the last CD was liked a confirmed 10% return candidate for the next two years.
The entry price is important though.
(24-08-2012, 10:12 PM)yeokiwi Wrote: [ -> ]Neratel before the last CD was liked a confirmed 10% return candidate for the next two years.
thanks. what happened to neratel now..seems like it is not a confirmed 10% candidate?
(24-08-2012, 06:52 PM)mrEngineer Wrote: [ -> ]Yeokiwi, what do u look out for in the management?
Dividend payment.haha. A consistent dividend payment is quite important.
Directors from problematic companies. Eg. Mr Lim Seck Yeow. I have problems having this kind of director in any of my holdings.
Management that are able to divest away businesses at good value and good timing.
Management that can acquire businesses at good value versus management that bought companies at high valuation.
Some background investigation of the directors can be conducted using google. Sometimes, it will yield information that is useful.
For PRC directors, baidu may be a better source of information gathering.
But, I suppose, going to AGM is probably the best way to assess the management.
(24-08-2012, 07:03 PM)pianist Wrote: [ -> ]how to find investment return >10% every year?
Some pp are born lucky. I have an ex-colleague who told us she has a savings plan with her mama. She put in any amount $, her mama will match it. Thats 100% return! The catch is she can only use this money when she is above certain age.