Focused Compounding Ep 19. All About Moats
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Apr 2, 2018 Dive into the world of investing as the hosts unpack the concept of moats and their significance in safeguarding businesses from competition. Learn about companies like Walmart and Geico, which exemplify how scale and local advantages secure market positions. Discover the dynamics of niche markets and how smaller retailers can thrive despite challenges. The discussion also emphasizes operational stability and the intricacies of analyzing competitive edges. Tune in for valuable insights on maximizing returns through strategic investments!
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Moats and ROIC
- High-quality companies often possess "moats."
- A moat isn't just high return on invested capital (ROIC), but what allows sustained high ROIC.
Moat Definition
- Moats prevent competitors from establishing survivable niches.
- This allows companies to maintain high ROIC over extended periods.
Breeze-Eastern and BWX: Moat via Scale
- Breeze-Eastern and BWX Technologies exemplify moat through scale.
- Their customer, the US Navy, only needs a limited number of products.
