2. Unintelligible footnotes usually indicate untrustworthy management.
3. Be suspicious of companies that trumpet earnings projections and growth expectations.
4. Suspect those CEOs who regularly claim they do know the future –and we become downright incredulous if they consistently reach their declared targets.
5. Managers that always promise to “make the numbers” will at some point be tempted to make up the numbers.
6. Derivatives are financial weapons of mass destruction.
7. A director whose moderate income is heavily dependent on directors’ fees is highly unlikely to offend a CEO or fellow directors, who in a major way will determine his reputation in corporate circles.
8. If regulators believe that “significant” money taints independence (and it certainly can), they have overlooked a massive class of possible offenders. (referring to outside directors)
Those attributes are two legs of our “entrance” strategy, the third being a sensible purchase price. We have no exit to strategy –we buy to keep.
That is one reason why Berkshire is usually the first- and sometimes the only –choice for sellers and their managers.
This is the synopsis of Warren Buffet speech in 2003.