Any Buffett disciple will tell you the importance of companies having a moat, in other words, a defensible market position that keeps their competitive positioning sharp. Things change quickly in business and so, the next question is how long until your moat dries up?
The competitive advantage period is something that Lee Rosenbaum, Vice President and Portfolio Manager, Loomis Sayles, models in detail, referring to it as the ‘duration effect’. This can help find companies with free cash flow growth north of 20%, and that can maintain this for longer periods. In this short video, Lee cites an example of this in a well-known global financial services company with a business in Australia.
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Thanks for the Video. I would have loved it even more if there were a transcript.