Finding companies that are undervalued and have a moat, or competitive advantage, is a winning combination for value investors. Determining if a company has a moat can be difficult, and finding a company that has a long term competitive advantage can be even harder. Here is an article from morningstar.com that talks about moats, and gives you some examples so that we can learn how to spot them.
See highlights bellow:
At Morningstar, the concept of economic moats is a cornerstone of our stock-investment philosophy. Successful long-term investing involves more than just identifying solid businesses, or finding businesses that are growing rapidly, or buying cheap stocks. We believe that successful investing also involves evaluating whether a business will stand the test of time.
Castles and Moats
The concept of an economic moat can be traced back to legendary investor Warren Buffett, whose annual Berkshire shareholder letters over the years contain many references to him looking to invest in businesses with “economic castles protected by unbreachable ‘moats.'”
Moats are important to investors because any time a company develops a useful product or service, it isn’t long before other firms try to capitalize on that opportunity by producing a similar–if not better–product. Basic economic theory says that in a perfectly competitive market, rivals will eventually eat up any excess profits earned by a successful business. In other words, competition makes it difficult for most firms to generate strong growth and margins over an extended period of time.
Vivendi having problems finding buyers for Activison Blizzard
I have thought for a while now that Vivendi would have difficulty finding a buyer for Activision Blizzard, this article only confirms my suspicions. So far it looks like Microsoft and Disney have said no to buying ATVI. If they cannot find a buyer, then they will either sell the shares on the open market or do some kind of spin off of ATVI.
Leon Cooperman, who founded Omega Advisors investment fund in 1991, and who is now worth $2 billion, gives his tips on how to succeed in business, and how to become a better investment advisor.
I hope you enjoy.