Lessons From Warren Buffett: How to Evaluate the Quality of a Company’s Management
February 6, 2021Lessons From Warren Buffett, Value Investing, Warren Buffett Value Investing, Warren Buffett
--------------------------------------------------------------------------------------------------
Companies need to provide quality goods or services, and they also good management that can chart a course to long term profitability. How can an investor evaluate the quality of the management? According to Warren Buffett, it all comes down to two things.
Warren Buffett explained at the 1994 Berkshire Hathaway Annual Meeting.
"Well, I think you judge management by two yardsticks, One is how well they run the business, and I think you can learn a lot about that by reading about both what they’ve accomplished and what their competitors have accomplished, and seeing how they have allocated capital over time. You have to have some understanding of the hand they were dealt when they themselves got a chance to play the hand. But, if you understand something about the business they’re in, and you can’t understand it in every business, but you can find industries or companies where you can understand it, then you simply want to look at how well they have been doing in playing the hand, essentially, that’s been dealt with them. And then the second thing you want to figure out is how well that they treat their owners.”
---------------------------------------------------------------------------------------------------------
© 2021 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future result.
Source
No comments:
Post a Comment