Buffett looks for companies with a competitive advantage from "summary" of The Warren Buffett Portfolio by Robert G. Hagstrom
One of the key principles that Warren Buffett adheres to when selecting investments is the idea of a competitive advantage. Buffett is always on the lookout for companies that have a strong competitive advantage over their competitors. This competitive advantage can come in many forms, such as brand recognition, economies of scale, or proprietary technology. Companies that possess a competitive advantage are better positioned to maintain their market share and profitability over the long term. When a company has a strong competitive advantage, it is able to fend off competition more effectively and protect its market position. This allows the company to generate sustainable profits and deliver consistent returns to its shareholders. Buffett understands the importance of investing in companies that have a durable competitive advantage, as this is a key factor in determining the long-term success of an investment. Buffett's focus on competitive advantage is grounded in the idea of investing in businesses that have a moat around them. This moat serves as a barrier to entry for competitors, making it difficult for them to encroach on the company's market share. Companies with a wide economic moat are able to generate strong returns on invested capital and maintain their competitive position in the market. By investing in companies with a competitive advantage, Buffett is able to align himself with businesses that have a strong foundation for long-term success. These companies are able to weather economic downturns and industry disruptions more effectively than their competitors. Buffett's investment philosophy is built on the idea of buying and holding onto companies with strong competitive advantages, allowing him to benefit from their sustained profitability over time.- Buffett's emphasis on competitive advantage highlights his focus on investing in businesses with enduring strength and resilience. By seeking out companies with a competitive advantage, Buffett is able to identify opportunities that have the potential to deliver superior returns over the long term. This approach has served him well throughout his investing career and continues to be a guiding principle in his investment decisions.
