Core to our investment strategy is the idea of buying a company for less than its intrinsic value. But calculating a company’s intrinsic value – i.e., the discounted present value of future free cash flows – can be a very difficult task. If we don’t know approximately what a company will earn over the next 10 (or more) years, then we cannot value it. And if we cannot value it, then we cannot own it. How would we know if it’s selling at a discount? Therefore, we focus on companies that operate in mature, stable industries with no major threat of technical obsolescence. In addition, we seek companies that possess a competitive advantage, or an edge that allows them to generate sustainably high returns on capital and growing earnings over the long run. That’s because, in our view, only these kinds of companies are capable of producing “durable profits” that can be relied upon to make reasonable assumptions about future free cashflows – the dominant factor in calculating a company’s intrinsic value.