We believe the most important contributor to the long-term investment performance of the companies we own is earnings growth, not a change in valuation. Because growth is driven by earning high returns on capital and successfully reinvesting cash flow, we tend to be very long-term investors our average holding period runs about seven years in [...]

When we see competitors holding 75 to 100 positions, with 75 to 100 percent annual turnover, we're either very impressed with their ability to keep track of 150 or more companies . . . or we're skeptical of their ability to credibly follow that many companies. We don't have anywhere near that many good ideas [...]

We're basically willing to pay average or below-average valuations for companies we believe will continue to have better-than-average performance. Relative to more elaborate valuation disciplines you may hear about from others, ours is relatively simple. Only a small amount of our returns are from being clever on valuation when we buy.

We believe the most important contributor to the long-term investment performance of the companies we own is earnings growth, not a change in valuation. Because growth is driven by earning high returns on capital and successfully reinvesting cash flow, we tend to be very long-term investors our average holding period runs about seven years in [...]