Business Criteria

UNDERSTANDING THE BUSINESS is the differentiating factor that distinguishes the business oriented investor from most speculators who merely buy stocks.

CONSISTENT OPERATING HISTORY generally assures the best returns. 'Turn-arounds' seldom do.

FAVORABLE LONG TERM PROSPECTS are enjoyed by companies with the ability to easily raise prices, earn significantly on capital and even tolerate mismanagement.

Management Criteria

MANAGEMENT RATIONALITY is distinguished by its ability to allocate the company's capital. What is done with the company's earnings - whether reinvestment in the business or returning money to shareholders - determines shareholder value.

MANAGEMENT INTEGRITY is portrayed by its distribution of all data that determine a company's economic performance, its value, and its ability to meet future obligations.

MANAGEMENT COURAGE is evidenced by its ability to discuss failure openly. Too many managers report to shareholders with excess optimism rather than honest explanation.

Financial Criteria

FOCUS ON RETURN ON EQUITY to determine how well management accomplishes its task of generating a return on the operations
of the business given the capital it employs.

COMPANIES WITH HIGH PROFIT MARGINS

CALCULATE SHAREHOLDER EARNINGS

Acquisition Criteria

VALUE - If a business has operated with consistent earnings, future cash flows can be determined with a high degree of certainty.

PRICE - Once we determine that a potential acquisition has the intrinsic values that are important to us, we are able to rationalize a premium that allows us to be competitive in a process against both strategic and financial buyers.