As investors, we are always interested in companies with a barrier to competition from other firms. However, we need to be mindful that, sooner or later, the barrier can start coming down. Take the gaming industry. It seems to be well insulated from competition by government regulation. But there could be a danger in relying on such barriers to entry. Quality is a drum we beat relentlessly at Montgomery. On a long term basis, investing in companies that can reinvest at high rates of return at a price sufficiently below their fair value generates strong investment returns. While many companies can generate a high return on capital at certain points of their lifecycle, the key is picking companies that can sustain high rates of return on incremental capital reinvestment. This generally requires some sort of barrier to entry that protects a business from open competition. This could be a brand, a scale benefit, a proprietary process or product that cannot be replicated by competitors.