Quality usually comes down to two things: a durable moat that protects margins, and a pristine balance sheet that ensures survival. If a company has pricing power but relies on a mountain of debt to operate, it’s not high quality, it's just leveraged. Zero existential debt and high free cash flow conversion are non-negotiable.
Quality usually comes down to two things: a durable moat that protects margins, and a pristine balance sheet that ensures survival. If a company has pricing power but relies on a mountain of debt to operate, it’s not high quality, it's just leveraged. Zero existential debt and high free cash flow conversion are non-negotiable.
Odd to think that the human mind is more attracted to one of these, you can guess which one!