Warren Buffett is known as arguably one of the greatest investors of our time and has made his fortune by making strategic investments that met specific criteria. When analyzing his investment strategy, we noticed similarities with the Volaris approach to acquiring businesses. In part one of this series, we’ll be taking a look at three of the criteria that Warren Buffett uses to select stock and how that mirrors the Volaris way.
#1 Look for Good Leaders
Buffett will analyze the leadership team to determine how they have run the business and if they’ve been able to keep the company out of debt. Buffett realizes that everything flows from the top down, so having a strong leadership team in place is essential. At Volaris, we are always looking for the next generation of leaders within our organization and ensure that each of our business units have a strong leadership team in place. As said in an earlier blog post, we look for leaders who have the ability to learn and want to continually improve and grow.
#2 Invest in the Long Term
Will the company’s solutions still be used 30 years from now? This is something Warren Buffett takes into account when evaluating investments. He looks for companies that have long term sustainability. Similarly, when we invest in a company, we do so for the long term. Our buy and hold philosophy is what separates us from other investment firms, as we recognize that to make a company the market leader, you need to think long term and not just focus on short term gains.
When considering investments, Buffett prefers companies that are relatively stable and looks at past metrics to determine this. At Volaris, we too look for stable companies that are number one or two in their vertical and are trending to the right. Since we are a metrics driven organization, we use a variety of metrics to track and measure our different business units.
It takes more than just following these three criteria to be as savvy as Warren Buffett, but it’s a start. There is much to be learned by studying Buffett’s techniques, so be on the look out for more posts from us about Warren Buffett.
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