Buffettology

Many believe that Warren Buffett's annual letters to Berkshire Hathaway shareholders are 'must reads' for managers. Although Buffett is regarded as one of the sharpest investment minds on the planet, he has a knack for explaining business concepts in a manner that 'normal' folks like us can understand.

His letter that covered the 2007 fiscal year is no exception. While the entire letter is a worthy read, head to the section beginning on page 6 called 'The Great, the Good and the Gruesome' and then answer the following questions:

1) What are the four criteria that Buffett (and his longtime sidekick Charlie Munger) use when evaluating the attractiveness of a business?

2) What does Buffett mean by an 'enduring moat?' How can this concept be linked to the Five Forces analysis approach that we've discussed in class?

3) The worst kind of business is one that grows _____, requires _____ capital to engender growth, and then earns _____ money.

4) What three examples does Buffett offer of great, good, and gruesome businesses? Why are these worthy examples?

Write me a one page memo that answers these questions.

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