Warren Buffett is the world’s best investor. Together with his partner Charlie Munger, they run investment holding company Berkshire Hathaway. They have returned an average of 23% per annum for almost four decades.
I came across their investment checklist in the 1995 Annual Report for Berkshire Hathaway and thought that it is important enough to reproduce it here in full.
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Berkshire Hathaway Inc
Acquisition Criteria
We are eager to hear from principals or their representatives about businesses that meet all of the following criteria:
1. Large purchases (at least $25 million of before tax earnings),
2. Demonstrated consistent earning power (future projections are of no interest to us, nor are ‘turnaround’ situations),
3. Businesses earning good returns on equity while employing little or no debt,
4. Management in place (we can’t supply it),
5. Simple businesses (if there’s lots of technology, we won’t understand it),
6. An offering price ......