Comments on: How To Find A Stock With A Moat http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/ Value Investing Blog Mon, 16 May 2011 10:55:06 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Joe Ponzio http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-1754 Joe Ponzio Wed, 14 May 2008 05:44:53 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-1754 I think the concept of moat can be summarized in a simple question: <strong>What edge does this business have that virtually guarantees that it will be making the money (or more money) five and ten years from now?</strong> There is no simple answer because it varies from business to business and industry to industry. I think the concept of moat can be summarized in a simple question: What edge does this business have that virtually guarantees that it will be making the money (or more money) five and ten years from now?

There is no simple answer because it varies from business to business and industry to industry.

]]> By: Wasi Mohsin http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-1736 Wasi Mohsin Wed, 30 Apr 2008 21:32:04 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-1736 Very good article. I have always wondered how can you objectively define 'moat' which is frequently emphasized by Mr. Buffet. I am from Canada and Walmart is a household term as well as the Tim Horton (which is synonymous for coffee) Thanks for the nice, brief and easy to get article. Wasi Mohsin <a href="http://swmohsin.com" title="http://swmohsin.com" target="blank" rel="nofollow">http://swmohsin.com</a> Very good article. I have always wondered how can you objectively define ‘moat’ which is frequently emphasized by Mr. Buffet. I am from Canada and Walmart is a household term as well as the Tim Horton (which is synonymous for coffee)

Thanks for the nice, brief and easy to get article.

Wasi Mohsin

http://swmohsin.com

]]> By: Joe Ponzio http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-1427 Joe Ponzio Wed, 13 Feb 2008 17:02:52 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-1427 Check out <a href="http://indiainvestor.wordpress.com/" title="Sanjay Shetty's India Investor">Sanjay Shetty's India Investor</a>. He has some great spreadsheets that can be used as screeners. Check out Sanjay Shetty’s India Investor. He has some great spreadsheets that can be used as screeners.

]]> By: Melvin Gillette http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-1422 Melvin Gillette Wed, 13 Feb 2008 15:10:11 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-1422 Liked Roberts idea of a spreadsheet. Robert could you share it with me also. Or perhaps Joe you can share one. Then maybe I can contribute commennts on companies I'll try to analyze. Melvin Liked Roberts idea of a spreadsheet. Robert could you share it with me also. Or perhaps Joe you can share one. Then maybe I can contribute commennts on companies I’ll try to analyze.

Melvin

]]> By: Robert Crawford http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-461 Robert Crawford Thu, 11 Oct 2007 20:50:03 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-461 Sanjay, Ryan, and Ron, I sent the spreadsheet to Joe a couple of days ago. After testing it, we talked on the phone today. I'm trying to make an explanatory video that is sufficiently small to download. With any luck, it will be ready in the next day or so -- Joe's schedule and my verbosity permitting. Thanks, Robert Sanjay, Ryan, and Ron,

I sent the spreadsheet to Joe a couple of days ago. After testing it, we talked on the phone today. I’m trying to make an explanatory video that is sufficiently small to download. With any luck, it will be ready in the next day or so — Joe’s schedule and my verbosity permitting.

Thanks,

Robert

]]> By: Ron http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-436 Ron Tue, 09 Oct 2007 09:09:35 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-436 I would also like to run your program as well. It does take some time to screen out undesirable stocks. My e-mail is myaddy111@hotmail.com. Thanks, Ron I would also like to run your program as well. It does take some time

to screen out undesirable stocks. My e-mail is myaddy111@hotmail.com.

Thanks,

Ron

]]> By: Ryan Watson http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-431 Ryan Watson Tue, 09 Oct 2007 01:31:20 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-431 Robert, I would be very interested in taking a look at the program you have made as well. If you don't mind, could you send me the program or a link to the program? My email is WatsonR711@gmail.com. Thanks a lot. -Ryan Robert,

I would be very interested in taking a look at the program you have made as well. If you don’t mind, could you send me the program or a link to the program? My email is WatsonR711@gmail.com. Thanks a lot.

-Ryan

]]> By: Sanjay Shetty http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-430 Sanjay Shetty Mon, 08 Oct 2007 19:35:54 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-430 Hi Robert, Could you share the program you mention, would love to check it out :-) You could mail me the details, my id is my last name at hotmail.com Thanks in advance! Regards, Sanjay Shetty I blog at: http://indiainvestor.wordpress.com/ P.s. my last name is "shetty" :-) Hi Robert,

Could you share the program you mention, would love to check it out :-)

You could mail me the details, my id is my last name at hotmail.com

Thanks in advance!

Regards,

Sanjay Shetty

I blog at: http://indiainvestor.wordpress.com/

P.s. my last name is “shetty” :-)

]]> By: Robert http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-424 Robert Mon, 08 Oct 2007 14:49:04 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-424 Over the weekend, I converted Joe's JNJ worksheet to a program that would query web-available data from Morningstar and Yahoo and create a summary sheet for the stock symbols identified as possibilities. Given the problems associated with valuing financial stocks, the less than five-years of patent exclusivity that is now the norm for non-generic medications, and Buffet's reasonable reluctance to consider high-tech stocks (where barriers to entry are fleeting and comparative product analysis is difficult, at best), I populated the Excel file with the remaining Fortune 500 stock symbols (325 of them). If memory serves, there were 82 that met the initial cut (i.e., discount rate > 15 percent). Apply Joe's >13% threshold for CROIC and the remainder was roughly 30 stocks, without considering FCF variation and shareholder's equity growth reliability. My list is now down to 15, and I'm working through analysis of the financials (common ratios) and a reading the 10Ks and 10Qs, which tend to cull the majority of the remaining. For the few that make the cut, sensitivity analysis will follow (looking at up-side versus down-side risks at various growth rates, based on past performance), and I'll perform reconnaissance for a moat (an amorphous concept with tangible benefits). Interestingly, I did the same for international ADRs first, using the NYSE lists. Consequently, the 30 that met the initial S&P 500 cut support Joe's contention that there are abundant stocks worth considering. Add the rest of the Russell 2000 and the international ADRs, and there are options aplenty. There are three caveats worth mentioning. First, as Joe has mentioned repeatedly, this level of analysis (mine) seeks precision in an imprecise exercise (i.e., there is an element of art to this science, and beauty is defined by the beholder). Second, BH purchases are limited by the size of the target company, while mine are not (a function of my relative wealth ... er, poverty). I could sell the house and invest the proceeds in a single company and not move the stock price. Third, Buffet likened stock selection to the perfect at-bat in baseball -- where no balls or strikes are called and the batter is not compelled to swing at anything other than a juicy fat one that is ripe for the outfield bleachers. He has, therefore, indicated that he needs only one good idea each year to achieve success. I'm still looking for the one, but the year is young. Over the weekend, I converted Joe’s JNJ worksheet to a program that would query web-available data from Morningstar and Yahoo and create a summary sheet for the stock symbols identified as possibilities. Given the problems associated with valuing financial stocks, the less than five-years of patent exclusivity that is now the norm for non-generic medications, and Buffet’s reasonable reluctance to consider high-tech stocks (where barriers to entry are fleeting and comparative product analysis is difficult, at best), I populated the Excel file with the remaining Fortune 500 stock symbols (325 of them). If memory serves, there were 82 that met the initial cut (i.e., discount rate > 15 percent). Apply Joe’s >13% threshold for CROIC and the remainder was roughly 30 stocks, without considering FCF variation and shareholder’s equity growth reliability. My list is now down to 15, and I’m working through analysis of the financials (common ratios) and a reading the 10Ks and 10Qs, which tend to cull the majority of the remaining. For the few that make the cut, sensitivity analysis will follow (looking at up-side versus down-side risks at various growth rates, based on past performance), and I’ll perform reconnaissance for a moat (an amorphous concept with tangible benefits). Interestingly, I did the same for international ADRs first, using the NYSE lists. Consequently, the 30 that met the initial S&P 500 cut support Joe’s contention that there are abundant stocks worth considering. Add the rest of the Russell 2000 and the international ADRs, and there are options aplenty.

There are three caveats worth mentioning. First, as Joe has mentioned repeatedly, this level of analysis (mine) seeks precision in an imprecise exercise (i.e., there is an element of art to this science, and beauty is defined by the beholder). Second, BH purchases are limited by the size of the target company, while mine are not (a function of my relative wealth … er, poverty). I could sell the house and invest the proceeds in a single company and not move the stock price. Third, Buffet likened stock selection to the perfect at-bat in baseball — where no balls or strikes are called and the batter is not compelled to swing at anything other than a juicy fat one that is ripe for the outfield bleachers. He has, therefore, indicated that he needs only one good idea each year to achieve success. I’m still looking for the one, but the year is young.

]]> By: Joe Ponzio http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat/#comment-413 Joe Ponzio Sat, 06 Oct 2007 18:04:08 +0000 http://www.fwallstreet.com/article/37-how-to-find-a-stock-with-a-moat#comment-413 You have two choices - dig deeper for a moat, or skip it and move on. For some companies and industries, you really have to dive in and find the moat. You have to ask questions (and then answer them - don't worry, it doesn't make you crazy). Moats can come in all shapes and sizes, and are not always easily identifiable. If you can't identify the moat or are unsure, skip it. You have literally thousands of potential investment options available. Don't worry about missing this one boat. Hope that helps! You have two choices – dig deeper for a moat, or skip it and move on. For some companies and industries, you really have to dive in and find the moat. You have to ask questions (and then answer them – don’t worry, it doesn’t make you crazy). Moats can come in all shapes and sizes, and are not always easily identifiable.

If you can’t identify the moat or are unsure, skip it. You have literally thousands of potential investment options available. Don’t worry about missing this one boat.

Hope that helps!

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