Learning about the details of the transition Buffett made from cigar butts to quality businesses is a fascinating process. What better way than to refer to Fisher’s own methods that also greatly influenced Buffett.

These checklists are from Philip Fisher’s Conservative Investors Sleep Well

Evaluating Promising Firms Per Philip Fisher In Conservative Investors Sleep Well

Philip Fisher
Image source: Wikimedia Commons

Business Characteristics

1) What are the trends in the price to sales ratios for the company?

Increasing

Decreasing

2) Does the firm operate so efficiently that high margins are protected by that operational efficiency?

Yes

No

3) Is the firms competitive advantage easy to identify

Yes

No

4) Does the firm have the ability to enter new markets and compete against established players in those markets?

Yes

No

5) When the company does enter a new market does it use ingenuity or novelty to gain traction?

Yes

No

6) Does the company display excellence in areas that will help it guard against competition in markets where it is already established?

Yes

No

Functional Items

1) Is the company a low cost producer?

Yes

No

2) Does the company have a customer relationship that allows it to react quickly to changes in tastes and preferences?

Yes

No

3) Does the company have an effective marketing program that keeps a close eye on costs and effectiveness?

Yes

No

4) Does the firm have a strong research capability that allows it to produce new products/better products or for non-manufacturing firms to provide services more effectively or efficiently?

Yes

No

  1. Checklist 1: Business characteristics (PDF)
  2. Checklist 2: Functional elements (PDF)
  3. Checklist 3: People elements (PDF)

These are basic checklists. Check out whether you can apply any into your process today. Nothing difficult, but an easy way to improve on one aspect each and every day.

 

 

Conservative Investors Sleep Well

By Jae Jun, Old School Value