“I try to buy stock in businesses that are so wonderful that an idiot can run them because sooner or later, one will.” W. Buffett
Investors are constantly forced to assess the sustainability of company business models when looking at adding new stocks to their portfolios or critically evaluating the companies that they currently own. Indeed an institutional investor may be exposed to the management teams from several hundred companies in any given year. Amongst those companies they will find large variations in both management and business model quality. During bull markets with supportive business conditions it can be quite difficult to separate management quality from the positive tailwinds the business is currently enjoying.
In this week’s piece we are going to look at the characteristics of ‘idiot proof’ companies and the reciprocal which are companies that typically need both supportive market conditions and a strong management team to prosper. Obviously the conditions of strong management teams and a sympathetic business environment are rarely permanent.
Read more here.