Buffet’s Tenets:
10. Focus on return on equity, not earnings per share. EPS is meaningless, since the equity base can expand over time due to increased retained earnings. Therefore, EPS does not necessarily reflect good managerial performance.
11. Calculate owner earnings. Seek out companies that produce cash in excess. Owner earnings is equal to net income plus depreciation, depletion, and amortization, minus capital expenditures necessary to maintain its economic position and unit volume.
I’d rather have a $10 million business making 15% than a $100 million business making 5%. I have other places I can put the money. -- Warren Buffett
We like to buy Businesses, but we don’t like to sell them. --Warren Buffett