In trying to find L-T winners, I try to think about the following features [non-exhaustive]...you might only realize that these features are present after you own the co & know it better...features are easier to identify in hindsight, but the present often feels more uncertain
1) A company creates value for customers in a way that others find hard to replicate [in particular I have enjoyed reading @bradsling on NZS and whether it would matter to customers if a bomb fell on the company's HQ]
2) A company can capture a portion of that value in economically profitable business model, but still leave significant customer surplus on the table
3) There is some feature whereby the larger the company gets, the better it gets at things like providing value to customers, seeking out opportunity, innovating and, thus, putting more distance between itself and the competition
A classic essay on this: hbr.org/1996/07/increa…
A classic essay on this: hbr.org/1996/07/increa…
4) A company operates in a large enough market [potentially with logical adjacencies] that questions over TAM are irrelevant & the law of large numbers [in terms of your starting market cap/revenue base] is not an issue...the market could also be new & in the process of formation
5) There is some sort of change or tailwind in the real world that a company is, in Munger's sense of the word, surfing [see here: grahamanddoddsville.net/wordpress/File…]
6) There is some kind of special sauce in an owner operator or innovative culture that drives the business forward innovating, seeking out opportunity, following customers & building what Helmer calls Power
[caring about long term value creation for owners is implicit here]
[caring about long term value creation for owners is implicit here]
