“I want a business with a moat around it. I want a very valuable castle in the middle. And then I want…the Duke who’s in charge of that castle to be honest and hardworking and able…” So said Warren Buffet, addressing MBA students at the University of Florida in 2007.
The concept of a moat around a business is very valid for a lender – the businesses with the biggest moats are the ones that will be sustainable long into the future and, therefore, most likely to have strong cash flows to ensure repayment of debt.
PSG Asset Management have written in detail about what moats are and why they’re so important. Click here to read.