Forum Archive Index - October 2000

["Brian Brakenridge" <brianbrak@xtra.co.nz>]

To summarise his philosophy I'll use one of his numerous quotes.

 

"If I had a billion dollars and the pick of the top 50 managers in the country could I compete with the business I'm looking at?"

 

He looks for:

 

1. Identifiable consumer monopoly.

2. Strong earnings and showing an upward trend consistently for the past 5 preferably 10 years.

3. Consistently high return on equity, preferably over 15%, for the past 5 - 10 years.

4. Conservatively financed (quote:"it's easy to tell who is swimming naked when the tide goes out")

5. Can the company adjust prices to inflation

6. How much capex is needed annually to maintain operations

7. Can the business retain earnings and will value added by retained earnings increase market value?

8. Is the company operating in a highly competitive environment which could have a strong effect on net margins?

9. And a biggy for Mr B, is the company operated by managers of unfailing integrity who think like owners and never fail to take care of the shareholders investment.

 

Again I have to go back to BCH and possibly WHS. My only criticism of BCH under the above list is that I am sure they could employ retained earnings better than I can if they are payed to me as dividends.

 

Brian