“We’ve really made the money out of high quality businesses. In some cases, we bought the whole business. And in some cases, we just bought a big block of stock. But when you analyze what happened, the big money’s been made in the high quality businesses. And most of the other people who’ve made a lot of money have done so in high quality businesses.” Charlie Munger

“The risk of paying too high a price for good-quality stocks – while a real one – is not the chief hazard confronting the average buyer of securities. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.” Benjamin Graham

“We are looking at investing in very, very high-quality companies that have great franchises and that have had these great franchises for many years.” David Polen

"Generally speaking, I think if you’re sure enough about a business being wonderful, it’s more important to be certain about the business being a wonderful business than it is to be certain that the price is not 10% too high or 5% too high or something of the sort." Warren Buffett

"Once we 'd gotten over the hurdle of recognizing that a thing could be a bargain based on quantitative measures that would have horrified Graham, we started thinking about better businesses. And, by the way, the bulk of the billions in Berkshire Hathaway has come from the better businesses. Much of the first $200 or $300 million came from scrambling around with our Geiger counter. But the great bulk of the money has come from the great businesses." Charlie Munger

"Our goal is to find outstanding businesses at sensible prices, not a mediocre business at a bargain price." Warren Buffett

“If you’re moving to Florida, would you call a realtor and say get, you know, give me the cheapest neighborhood? [No, of course not]. Why do we do that in stocks?” Rajiv Jain

"See's Candy - it was acquired at a premium over book [value] and it worked.  Hochschild, Kohn, the department store chain was bought at a discount from book and liquidating value.  It didn't work.  Those two things together helped shift our thinking to the idea of paying higher prices for better businesses." Charlie Munger

"Charlie made me focus on the merits of a great business with tremendously growing earnings power - but only when you can be sure of it - not like Texas Instruments or Polaroid, where the earnings power was hypothetical." Warren Buffett

“I much prefer to be long a good business, so we focus on buying growth at a reasonable price.” Larry Robbins

"Our interest starts first with the quality of the business."  Jeffrey Ubben

“A great company keeps working when you’re not. A great company will eventually earn more and more and more while your just sitting and doing nothing. And a mediocre company won’t do that. So you’re harnessing a long range force that will help you. It’s very important. These mediocre companies, they by and large are going to cause a lot of agony and very modest profits. If you do fine, you’ve got to sell it and find another one. It’s a lot of work. Whereas you just buy one great company, and if you get the right thing at the right price, you just sit there.” Charlie Munger

"I would say that if it’s a really wonderful business, we probably come up with higher intrinsic values than most people do." Warren Buffett

“Other investors persistently underestimate quality, resulting in unduly low market valuations for the very best companies. This is the core proposition of Lindsell Train’s investment approach and one that provides us with an enduring market inefficiency to exploit.” Nick Train

“Buy the best companies. And we're willing to pay up for them." Roger Engemann

“To me it appears that exceptional companies with durable competitive advantages are in fact cheap almost all the time. The point is such companies are rare. It is plain wrong to expect them to be valued similarly to what is the vast majority of ephemeral, low value-added businesses.” Nick Train

"When you find a really good business run by first class people, chances are a price that looks high isn't high. The combination is rare enough, it's worth a pretty good price." Warren Buffett

"I look for good businesses.  A good business is one that provides a necessary service or products and has a balance sheet and cash flow that can sustain it through difficult periods.”  Kevin Daly

"Looking back, when we’ve bought wonderful businesses that turned out to continue to be wonderful, we could’ve paid significantly more money, and they still would have been great business decisions. But you never know 100 percent for sure. And so it isn’t as precise as you might think. Generally speaking, if you get a chance to buy a wonderful business — and by that, I would mean one that has economic characteristics that lead you to believe, with a high degree of certainty, that they will be earning unusual returns on capital over time — unusually high — and, better yet, if they get the chance to employ more capital at — again, at high rates of return — that’s the best of all businesses. And you probably should stretch a little." Warren Buffett

“You have to focus first and foremost on high-quality businesses that can’t blow up and should grow in value over time.” Bill Ackman

“Our strategy is to own high quality, modestly valued business over many years, to take advantage of the power of compounding as earnings grow. To do that successfully only works if we avoid mistakes – unforced errors – that interrupt the power of compounding.” Ira Rothberg

Quality matters, in businesses and in people. Better-quality businesses are more likely to grow and compound cash flow; low-quality businesses often erode and even superior managers, who are difficult to identify, attract, and retain, may not be enough to save them.” Seth Klarman

“We’re committed to owning high-quality businesses in industries we understand and can underwrite.” Adam Weiss

"I think you ignore business quality and management integrity to your peril when allocating capital."  Robert Vinall

"Why would anyone want to own a mediocre company just because it's cheap, when you can own and live with great companies?" T Rowe Price

"I started out looking for cheap securities...  Over time, I really fell in love with strong businesses. I morphed into finding strong businesses at bargain prices.  I still have a streak in me that favors finding really cheap securities - I just can't help it.   But over time, I've become more attracted to looking for great businesses that are inherently superior, more competitive, easier to predict, and with strong management teams."  Li Lu

"I looked back at the investments that had worked best for me over time and they were regularly in companies with superior business models. I concluded that the ultimate margin of safety was in the quality of the business and not the cheapness of the stock, so I re-orientated my process and decision-making around that." Jake Rosser

"My initial emphasis was just on valuation. The cheaper, the better. There were of course other parts to the analysts, of course, but the energy went to finding discounted companies. The bigger the discount, the more interesting, and that's the work you focused on. As I evolved, I began to feel that it was even more important to focus on business quality, specifically value stability.” C.T Fitzpatrick

"Our portfolios have shifted towards higher quality companies with sustainable barriers to entry." Marathon Asset Management

"Whereas we once might have been more willing to buy mediocre businesses at unbelievable prices, we are committed to buying good businesses at great prices and great businesses at good prices." Steven Romick

“What we learned is that if you buy a good and sustainable business, then over time the return of that business will do the natural compounding for you.”  William Browne

“Our preference is for high quality businesses that are easily understood. This alone eliminates the majority of investment alternatives, allowing us to focus our resources on understanding simple businesses without distraction from the noise outside of our circle.” Chris Parvese

“Our philosophy is to follow Charlie Munger’s advice and buy great companies at fair prices (instead of a fair company at a great price) and then allow our portfolio value to compound along with their earnings.” Shad Rowe

“Our resulting style in the partnership is to try and find outstanding businesses, to understand their true value, and when the price is reasonable, purchase shares.” Chuck Akre

“Our approach is simple. Great businesses not only survive but also thrive during crises.” IP Capital Partners

“Quality provides two things: a much lower probability of business extinction and the ability to compound capital.” Jerry Hakala

“The practice of not losing money is significantly advanced by the selection of superior businesses, because their royalty keeps on working in spite of general business conditions and isolated poor managerial decisions.” Chuck Akre

“This isn’t unique to us, but we want companies with large amounts of free cash flow, good business dynamics, a proven ability to profitably reinvest that cash flow and management properly incentivized to do the right thing for shareholders. We generally focus on businesses that are “two-cycle tested,” where they’ve been through a couple recessions and have survived intact.” Leon Cooperman

"We don't want any lousy businesses.  We used to make money buying them and wringing money out, but it is painful, especially when you're rich.  Sometimes it happens by accident, and then it is like dealing with your relatives and you hope to get rid of them but can't really." Charlie Munger

“If you’re in a lousy business for a long time, you’re going to get a lousy result even if you buy it cheap.” Warren Buffett

“Ben Graham had blind spots. He had too low an appreciation of the fact that some businesses were worth paying big premiums for.” Charlie Munger

"I tend to avoid the shares of weaker companies, even if their shares are selling at depressed prices. I strongly prefer purchasing undervalued shares of strong and well-positioned companies." Ed Wachenheim

"With respect to quality businesses, the key aspects are unit economics, returns on capital, appropriate leverage, free-cash conversion, market share, margin resiliency, moat, long-term growth potential, and management. The motivation for focusing on these types of businesses is that they blow up less frequently, and even if they do blow up, they do so with less severity.  High-quality businesses also provide natural tailwinds to returns by virtue of their economics, and their resiliency enables portfolio concentration, which is valuable because it affords the opportunity to perform deep primary research." Adam Weiss

“What makes a good business model? It primarily rests on structural competitive advantages, those inherent features that prevent rivals from entering a company’s business and/or competing effectively with it. Common examples would be natural monopolies or oligopolies, razor/ razorblade businesses, enduring brands, network effects, high switching costs and economies of scale. Perfect business models don’t exist, but many come close to varying degrees.” Frank Martin

"If a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area’s premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership’s moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can’t name its CEO." Warren Buffett

"People don't believe business quality is a hedge, but if your valuation discipline holds and you get the quality of the business right, you can take a 50 year flood, which is what 2008 was, and live to take advantage of it"  Jeffrey Ubben

“I know of no better hedge against an uncertain world than owning a well-selected basket of common stocks in high quality businesses at deeply discounted prices (under normal circumstances) and ignoring the unknowable and the uncontrollable.” Li Lu

“Owning only the best companies also allows us to protect on the downside. If you allow yourself to buy marginal or poor businesses, you introduce unnecessary risk into the portfolio. Our criteria aim to minimize that risk.” Daniel Davidowitz

"From our perspective, it's much safer to buy high quality business. It's Buffettesque. Buy those high quality businesses, give them time to work - five to seven years - they'll do well for you" Paul Black

"We think a rigorous discipline of buying quality companies, when priced right and run by honest, intelligent management teams, offers the best defence against challenging macro conditions" Allan Mecham

"I’m most interested in owning good businesses, run by managers who don’t make big mistakes." Ed Wachencheim

"A great business at a fair price is superior to a fair business at a great price." Charlie Munger

"One characteristic that makes owning a high quality company so attractive is the growth that comes from reinvesting cash flows at high rates of return.  Clearly compounding is a powerful force and is often the reason a stretched valuation can be made palatable"  Marathon Asset Management

“Over time, however, I found myself gravitating toward higher-quality businesses. [Our] firm only invests in high-quality businesses and, in fact, we have no interest in owning the vast majority of publicly traded companies at any price.” Chad Clark

“A base business cannot be transformed into a golden business by tricks of accounting or capital structure.  The man claiming to be a financial alchemist may become rich.  But gullible investors rather than business achievements will usually be the source of his wealth”  Warren Buffett

“Almost by definition, a really good business generates far more money (at least after its early years) than it can use internally”  Warren Buffett

"Business quality to us is the single most important criterion for determining what's interesting" Bill Ackman

“My goal as your portfolio manager is to populate our portfolio with companies possessing ‘winner DNA’ in great businesses of favourable industries and that we can purchase at a substantial discount to their intrinsic value.” Li Lu

“I am very interested in super high quality companies that have demonstrated success, have demonstrated earnings and high ROC and have some durable features that can give us high conviction” Chuck Royce

"The main thing is to find a wonderful business, like Phil Carret always did. He’s one of my heroes, and that’s an approach he’s used"  Warren Buffett

"It is really trying to find high quality businesses where we have a lot of confidence in the business.  If we make a mistake it is going to be that we mis-analysed the businesses - it was not as good as we thought"  Glenn Greenberg

"Shares of quality companies run for the shareholders stand an excellent chance of providing above-average returns to investors over the long term" Lou Simpson

"The single-most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business. I’ve been in both, and I know the difference." Warren Buffett

"Over the long term, it's hard for a stock to earn a much better return than the business which underlies it.  If the business earns 6% on capital over 40 years and you hold it for 40 years, you're not going to do make much different than a 6% return even if you buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you'll end up with a fine result.  So the trick is getting into better businesses." Charlie Munger

"Bear in mind--this is a critical fact often ignored--that investors as a whole cannot get anything out of their businesses except what the businesses earn." Warren Buffett

“Good is the enemy of great.  We see many companies that are just fine ... founders are good, market seems good, product seems good, customers kinda like it, and they got a little revenue and it's all fine, but those companies tend to never go anywhere.  Every once in a while we'll see these companies that have some extremely strong strength, some extremely special wonderful thing going on, that by the way may have all kinds of problems and issues, but there's something at the core of what it is that's really special and magical.  And those are the ones that we want to do.  We're trying to stock our portfolio with just investments like that."  Marc Andreessen

"Ira Marshall said [in reference to See's Candy] you guys are crazy - there are some things you should pay up for, like quality businesses and people. You are underestimating quality.  We listened to the criticism and changed out mind.  This is a good lesson for anyone, the ability to take the criticism constructively and learn from it."  Charlie Munger

"From 1932 to nearly the present, the studies confirm that when bad things happen to good companies, they recover - and usually quite nicely in a reasonable amount of time." Chris Browne 2007

"At the end of the day, in order to build wealth, there is a simple approach which we have followed for 17 years at Giverny Capital: investing for the long term in high-quality companies purchased at attractive valuations—investing in companies that will survive the crises of our civilization and the short-term irrationally of our economic system." Francois Rochon

"Generally speaking, it pays to stay away from declining businesses. They are very difficult to value. We have several declining businesses - the newspaper business is a declining business. We will pay a price to be in that business but that is not where we are going to make a lot of money. All the money at Berkshire is going to be made from investing in growing businesses.  I would never spend a lot of time trying to value a declining business that I call a cigar butt (one last free puff out of the business). I can spend the same amount of energy and intelligence analysing a growing business and am going to get a better outcome. At Berkshire, we have some declining businesses. We started with declining businesses, textiles, US made shoes, Blue Chip Stamps  - We have one business that did $120 million in sales in 1968 and last year did about $20,000 in sales. We'd like to bring the sales chart out and put it upside down." Warren Buffett

“On my time horizon, the calibre of a company is much more important than its value. You can be wrong about value in the short term, but still have a great investment over time. My worst errors have come from overestimating a company's business model, not overestimating the worth of a fine company.” Nick Train

"We buy good companies that we know will endure, that generate free cash usually in and out of recession." Chris Mittleman

"When we talk about business quality, we’re looking through our fundamental research to assess the company’s ability to protect and grow intrinsic value. If the dollar of assets you buy is increasing in value at an above-average rate, that’s an opportunity to generate alpha."  Ricky Sandler

"Our definition of quality is value stability. How stable is your value? Things that lend themselves to value stability are production of free cash flow, stable margins, and strong balance sheets." C.T Fitzpatrick

“It is easy to vacation or enjoy family if one owns great businesses — and it’s impossible if one is tracking a flock of trading positions about which one has little conviction.” Glenn Greenberg 

"Charlie and I are simply not smart enough to get great results by adroitly buying and selling portions of far-from-great businesses." Warren Buffett

"As students of the world’s best companies we prepare our shopping list well in advance. When volatility strikes, we can act quickly having already spent years (in many cases) researching the companies we purchase. As French Micro-biologist Louis Pasteur once said, ‘chance favors the prepared mind’.” Jake Rosser

"Is it a great business? That’s the key question. Is it earning high returns on capital and command high margins? Does it have a good history of growing its intrinsic value and rewarding shareholders? Warren Buffett has this great phrase: “If a company has a lousy past and a great future, we’ll miss it.” It’s the same thing here." Francois Rochon

"I would prefer a great business, great manager, one that is able to use all the capital they generate and can keep doing that. Behind that will be a great business, great managers that can use the capital; and then great business, not such great manager, and then we just go down the line. Not such a great business, not such a great manager, but still out to achieve and we will probably still make out. We have made investments in all of those and I learned over time that I am better off being more on the top than at the bottom end." Mohnish Pabrai

"Charlie’s most important architectural feat was the design of today’s Berkshire. The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices." Warren Buffett

"By owning great companies, you can just forget about all the noise and the irrational market fluctuations. And slowly get rich." Francois Rochon

"We look for very high quality businesses, what we'd describe as simple, predictable, free-cashflow generative dominant businesses. A business Warren Buffett would describe as having a moat around it." Bill Ackman

“Our approach to all our portfolios is the same: to identify and invest in high-quality businesses.” Rajiv Jain

"The requirements for a great business for us have three components. The first is, we spend a lot of time trying to understand what is causing the above average return to occur.  Is it getting better or worse?.  The second thing we look for are the people who run the business.  Not only do we want to have great business managers but we want see they treat public shareholders as partners even as though don't know them.  Lastly, we look to see if there is a great history of reinvestment of the free cash-flow as well as a significant opportunity to reinvest free cash-flow and earn above average rates of return.  None of those things ever behave in a constant fashion.  Business models get better or worse. Peoples behaviour sometimes change modestly.  The ability to reinvest or the results from re-investment vary from time to time. We make a judgement about which are real keepers."  Chuck Akre

"Characteristics of a good business include businesses that provide a demonstrable convenience to customers or a high value-added product or service, businesses capable of withstanding industry turmoil or a period of mismanagement, slowly evolving businesses with simple business models, businesses with recurring revenue streams and no need to continually recreate demand and/or replace customers, businesses with a minimum of uncontrollable factors affecting their results, businesses that do not have a concentrated customer base, and businesses that generate surplus cash flow after funding their growth." Jeffrey Ubben

"The idea is not just to find cheap businesses, but to find good businesses!. I learned that a cheap business can kill you, but a good business won't. I remember investing in a Spanish textile company that was selling below net cash. The stock was cheap, but the business was so lousy that the management team not only failed to keep it operating, but also lost all of its cash and assets. So sustainability and quality matter!." Francisco Garcia Parames

"Inferior quality generally produces inferior economics."  Warren Buffett

"My investment mistakes are too numerous to list here.  I noticed a few years ago that two common threads ran through all my investing mistakes.  The first was that I was buying inferior businesses due to what I perceived at the time to be a low multiple (but alas not a low valuation).  The second was that I was buying inferior businesses due to the prospect of a fast buck or what analysts term a catalyst." Robert Vinall

"Buying Berkshire Hathaway itself was a mistake because Berkshire was a lousy textile business and I bought it very cheap.  I'd been taught by Ben Graham to buy things on a quantitative basis and look around for things that are cheap. I was taught that in 1949-50 and it made a big impression on me.  So I went around looking for what I call used cigar butts of stocks.  You find on the street this terrible looking soggy cigar butt with one puff left in it, disgusting but it's free, it's cheap.  Then you look for the next one.  That's what I did for years.  It's a mistake. Although you make money doing it you can't make it with big money.  It's so much easier buying wonderful businesses.   Now I'd rather buy a wonderful business at a fair price that a fair business at a wonderful price.  Berkshire was selling below it's working capital per share, you got plants for nothing, you got machinery for nothing, you got the inventory and receivables at a discount. It was cheap, so I bought it and twenty years later I was still running a lousy business and that money did not compound.  Time is the friend of the wonderful business, you keep compounding.  Time is the enemy of the lousy business. Staying with those businesses is a mistake." Warren Buffett

"It must be noted that your Chairman, always a quick study, required only 20 years to recognize how important it was to buy
good businesses.  In the interim, I searched for ‘bargains’ - and had the misfortune to find some.  My punishment was an education in the economics of short-line farm implement manufacturers, third-place department stores, and New England textile
manufacturers." Warren Buffett 1987

“I have a bias towards quality businesses, especially family-owned. Many of our value competitors start the process of identifying likely investments by starting with price.  Looking at a screen.  We don’t believe in those screens.  Cheap looking stocks will end up on screens. They will be either the lousiest competitors in an industry or operating in industries which are overly competitive.  What makes us want to investigate a stock idea - it’s not that it looks cheap - but if there seems to be something unique or superior about it. It may not optically look cheap.” Charles De Vaulx

"The ability to raise prices – the ability to differentiate yourself in a real way, and a real way means you can charge a different price – that makes a great business." Warren Buffett

“An illiquid and low-quality company, I believe, has a much smaller pool of buyers ready to step in than a high-quality one. So, when we think about portfolio construction, we view quality from multiple dimensions, from fundamentals to liquidity and any associated discount.” Rajiv Jain

“More recently, our equity investment framework has drawn us to larger market capitalizations and we have learned to “pay up” for certain higher-quality companies with market-dominating positions.” Dan Loeb

"Great businesses are rare and so are the opportunities to purchase them advantageously. We attempt to deserve what we want by keeping this firmly front-of-mind." Chuck Akre

“We aim to invest in high quality businesses. This may sound blindingly obvious, but you might be surprised how many investors either don’t do this or do not have a good definition of a high quality business. In our view, a high quality business is one which can sustain a high return on operating capital employed.” Terry Smith

"Put simply, we can only expect quality to outperform, firstly, if 'quality' incorporates characteristics that should lead, if sustained, to superior long-term compounding of intrinsic value, and, secondly, if this superiority is not already captured in valuation." Marathon Asset Management

Quality is forward looking. Today everyone talks about buying quality at sensible prices, but you have to be sure you’re not overly anchored to backward-looking quality.” Rajiv Jain

“Presently, all our top holdings are powerful companies, often the undisputed leaders in their industry. They all have long histories of successes. They have enjoyed many years of growth through good and bad times and in all likelihood will continue to grow for many more years to come,” Li Lu 2013

“In actuality, all the companies that we have invested in over the years are leaders in their particular industries, certainly on a domestic basis and most even on an international basis.” David Polen