The business, if it is to have a value, must have growth. But growth in itself is not adequate till it is supported by the quality of growth. By this I mean the capability of a business to create a superior economic value over a period of time which essentially will come from the character of business and which is more often than not likely to come from return on capital employed and its ability to generate it on a superior basis for a long period of time.
The quality of the people behind the business is equally important because 80% of the managements are simply not trustworthy. And I am being conservative when I say 80%. So to that extent, the quality part is an integral part of that growth, apart from growth itself.
Finally, the package has to be bought at a price which is a sensible discount or correlation with what one defines as the intrinsic worth of the business. I think it is the amalgam of the three that represents value in my mind.
How he deals with a value pick that has turned into a growth stock...
