The Search for the Company with a Durable Competitive Advantage

By Mary Buffett

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Readers` Reviews

★ ★ ★ ★ ☆
henrik
Mary Buffett like many other authors tries to sell books by using Warren Buffett's name. I don't find anything wrong with that as long as they add value to their readers and I think she has with her newest book. Many individual investors (and sadly even professional statements) buy stocks of companies without looking at companies' financial statements. Yes, they can be very boring to read especially if you do not know what to look for. The authors of this book do a nice job in explaining what some of the numbers mean and more importantly what to look for. The stuff that they talk about is very basic but I think even more advanced investors can gain a few (not a lot) new insights. The book is poorly edited and redundant. Overall, how much you end up liking this book is significantly related to how much you already know about investing in equities.
★ ★ ★ ★ ★
danny
Five stars for this book because it accomplishes what it intends to be, a simple primer on how Warren Buffett invests, which means reading financial reports for critical details that tell you the financial health of the company and from that understanding, where it is going in the future. The book features over 60 short chapters starting with Buffett's philosophy on investing for the long haul and then, in a very simple format, breaks down financial statements; income statements, balance sheets and cash flow statements . The authors also explain key ratios that relate to performance such as gross profit to gross profit margin. The book also includes plenty of examples and a glossary all in less than 200 pages. Not for the accountant or someone well versed in stocks, but that's not the intended audience. For those interested in a reasonable introduction to smart investing, you can read the whole book on a three to four hour plane ride and you will see why companies like the auto industry struggle to make a profit. Of course Buffett's key, investing in companies with an incredible competitive advantage with low cost needs for retooling
★ ★ ★ ☆ ☆
alys
This book is more for the beginning "investor" who wishes to learn more about investing/finances than he/she already knows, and learn some ideas from the master investor himself. However, the book falls short of any real informative ideas to really further your quest to become the next great investor. There isn't any fresh ideas in here that is worth reading if you are already familiar with finances. However, if you never read a book ever about this sort of stuff, it's a simple straight forward enough book that can help you get started.

Buffett is a legend in the investing world, but anyone who has any money in the market today will tell you all this is bs now with the advance of electronic trading, spreading of false rumors so rapidly, and the immense fear that is gripping our economy and the world.

If you want a refresher course on investing, this is an ok book. It's small enough to fit into your briefcase, but big enough to read everything clearly.

The bible of investing books will always be Benjamin Grahams. If you can only afford one book, get Grahams.
30 Years of Lessons Learned from Warren Buffett & Charlie Munger at the Annual Shareholders Meeting :: Hannah's List (Reprint) (3/27/11) - By Debbie Macomber :: UNSUB: A Novel :: The Heroes: A First Law Novel (First Law World 2) :: Investment Strategies of the World's Greatest Investor
★ ★ ★ ★ ☆
tom and lore
An extremely basic but useful analysis of the interpretation of financial statements that follows this pattern: the authors break down a financial statement line-by-line and then provide a few paragraphs of commentary. They then offer their own analysis and plenty of anecdotes about Warren Buffet's own classic investment strategies. Each chapter (there are 57) is no more than a few pages, so the book can be read in bite-sized chunks over time; going back to reread and reference the best bits is easy. This is not a terribly involved book but it offers some interesting insight and encourages readers to invest by investigating a company's durability, instead of buying into the press coverage a company gets on business cable news shows.
★ ★ ★ ★ ★
cyndi fecher
This book was on my book wish list for a long time and I'm so excited for having it finally in my possessions. I'm also as excited and blown away as I was when I read Benjamin Graham's masterpiece "The Intelligent Investor" for the very first time. Before I got "Warren Buffet And The Interpretations Of Financial Statements" I read most of the reviews on this website and I must say now after I read the book a several times, they all had a point, good or bad, but all coming, as if, from the curse of knowledge. This book is a very intelligently presented investment policy, just like "The Intelligent Investor" is, suitable for the type of investor who is reading "The Casino Journal" in the morning just for the laughs. The single great idea of the book is that proper and realistic accounting is the difference between your "Dreamland" and the real world.

I apologize if I offended anyone with this review. It was all unintentional. This is merely an opinion which may not appeal to other people so it might be only relative to my own understandings of the world as a whole.

My Warmest Regards to the authors of this masterpiece.

M.I.
★ ★ ★ ☆ ☆
elle alexander
Neither Mary Buffett or David Clark are accountants and they make a lot of mistakes in this book. Their definition of "deferred taxes" on page 120 is off by a mile. On page 70, the definition of current liabilities incorrectly includes "long term debt" but omits the short-term portion of long term debt. In the next paragraph they give the correct definition of short-term debt but label it as the definition of long term debt. Clearly, neither of these people is particularly qualified to be writing about how to interpret financial statements, nor were their editors. However, they do a decent job of parrotting back things they heard from Warren.

This book is a decent resource for anyone who knows absolutely nothing about financial statements. People who already have some financial statement knowledge are likely to be disappointed. The one possible revelation for people with significant financial experience: Not needing to spend money on R&D is a strong sign of competitive advantage.
★ ★ ★ ☆ ☆
oceanack
I had a lot of good expecations about this book with the 'warren buffet' brand and written by someone in his family.

This book is simply about reading financial statements of companies, using buffet's methodology which is the author says is the next evolution of Graham's methodology. I do agree with the author, but all I am trying to say is that the book is basic & rudimentary, written in a poor business language. It is a good book for beginners.

Better read something else which is a wise investment of your time & money, checkout my wish list for some good books on investing:
http://www.the store.com/gp/registry/wishlist/CCSCQOW3V7DC/ref=cm_wl_rlist_go
★ ★ ★ ★ ☆
yolande
Every years billions are spent by listed companies in printing & mailing out millions of copies of their financial reports yet most of us never read beyond the chairman's message.

Many of us fear figures and would prefer to be poked in the eye with a hot metal rod, this book was written for you and me - in Kenya we would "say it was written for Wanjiku".

Armed with this book and the financial report of a listed or unlisted company you will become a true fundamental investor and in the long term you will be able to make millions from the stock exchange.

The fundamental teachings apply in all environments be it in Kenya or on Wall Street
★ ★ ★ ★ ★
yael wagner
This is a well written study of financial statements, the Buffett way. The study is quite simplified but this is the beauty of the book. If you have little understanding of financial theorys you will find this the best books you could ever read. For those with a greater understanding of finance you will receive an added value in the detailed study of the way Mr. Buffett analysis's each and every step of a financial statement and what he feels is important and what is not. This is a book that I will keep in my financial group of readings and I am sure I will read excerpts over and over. Buy this book, it is a investment in your future.
★ ★ ★ ★ ★
agnivesh
As a professional investor, I found most of the information very basic; however, I thoroughly enjoyed this book. People tend to complicate things in life as well as in investing. Warren Buffett preaches investing in companies that possess moats and buying them when the price is reasonable. All this book is trying to do is to help investors assess a company's moat. No, this book alone will not assure investment success, but it adds another tool to the tool box that can help beginning or advanced investors successfully invest in the stock market.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
★ ★ ☆ ☆ ☆
barbara dyer
I was expecting a sober (not boring, just sober) explanation of the key line items that Buffett looks at first when interpreting financial statements. I was expecting the author to talk to me like an adult. Instead, because of the saccharine and pandering writing style of the author, I felt like I was reading "Dr. Seuss Goes To Wall Street" (with apologies to Dr. Seuss).

For example:

-"...when a company owns a piece of a consumer's mind, it never has to change its products, which, as you will find out, is a good thing." (Really? Never having to change your product is a good thing? Hold on, let me write that down...)

-"Financial statements are where Warren mines for companies with the golden durable competitive advantage. It is the company's financial statements that tell him if he is looking at a mediocre business forever moored to poor results or a company that has a durable competitive advantage that is going to make him superrich." I included this because she uses the word "golden" like it's about to go out of style. That and "superrich". And what is the purpose of lines such as "...that is going to make him superrich"? Unless you're addressing 3rd-graders, couldn't you just leave bits like that out?

-"...it is best if we spend the next few chapters going through (certain income statement entries) one by one, in true Warren fashion." She's overtly sycophantic, which reduces her credibility. It's one thing to be respectful of Mr. Buffett and his success, but the author crosses the line between respect and fawning and never looks back. Other examples are when she starts sentences with "Warren figured out..." or "Warren noticed...", "Warren knows that...", "Warren discovered..." etc. etc.

This book actually does have lots of great information concerning those key line items I was looking for, such as the link between gross profit margins and durable competitive advantage. It's just that I had to wade through 175 pages of the author's writing style in order to find it.
★ ☆ ☆ ☆ ☆
nima afraz
This book is a disgrace!
Somebody buying this book as a present, for example, sees "Warren Buffet" in big writing on the cover and doesn't suspect it is written by two charlatans who can't even balance their sample "balance sheet".
The publisher, too, Simon and Schuster must be hammered for not having done the most rudimentary proof reading:-
1. p70 - ""Current Liabilities" ... includes Cash, Investments, Inventory, Receivables,..."??
2. p71 - balance sheet doesn't balance.
3. p163 - "Coca-Cola's earnings had been growing at an annual rate of around 15%". p168 - "... Coca-Cola's earnings had been growing at an annual rate of around 10%"!!
And other nonsense I can't be bothered to remember.
No doubt, Warren Buffett is too focused on important issues to worry about nonentities trading on his name but it would be nice to see him use a smidgeon of his "super super(wealth)" they keep on harping on about to sue the pants off the authors and publisher.
★ ★ ★ ☆ ☆
alli
Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage

If you are an educated investment professional you will find this a mediocre read at best, but will also be content with getting a couple of good ideas from the read. The title is a little deceiving because when you read "Interpretation of Financial Statements" on the cover you probably referencing the one by Benjamin Graham in your mind (which is way better!)

This is a great read for a beginner with little exposure to stronger works on Buffett or fundamental analysis. Even then, I believe Mary's Buffetology provided a more thorough outlook on Buffett's investment principles. Again, if you don't have any exposure to financial statements, then this text is helpful.

Low expectations are key with this book. Don't expect it to be thorough, don't expect to see a clear link between financial statement analysis and durable competitive advantage, and certainly do not expect to see Warren Buffett's definitive approach to financial statement analysis. It is not as thorough, as inclusive, or as accurate as the title might lead you to believe. The book is cheap however, and is worth the 30 minutes you will spend reading it. Beyond that I think both, beginner and a professional investor, are better off reading primary sources on this subject.
★ ☆ ☆ ☆ ☆
hassen
Is it just me or did the authors' definition of EBITDA seem odd? (P47). "Earnings Before Income Tax, Depreciation, and Amortization". Of course the correct element here is "Interest", not "Income Tax". The "I" in EBITDA represents "Tax". No?

The balance sheet in the recurring example does not in fact balance.

There are other errors. The book may give an insight into Buffet's investing strategy, then again it may not. When a so-called financial book has such glaring errors in it, the entire work tends to be discredited.

Didn't the authors have an editor? To catch these continuous errors?

Anyway, this book is NOT for beginners, as they would not know the errors when they encountered them. And, for someone with more experience, there are better books to spend your time on.
★ ★ ★ ★ ☆
garrett
A very straightforward, simple and Buffett-centripetal guide into reading financial statements. As the title connotes, the books is all about reading financial statements according to Buffett's experiences, praises the man's riches, and explains to the readers why certain parts of financial statements were/are crucial to understanding Buffett's success.
This is no exhaustive or complex book for financial statements, but more of a beginner's guide, with Buffett's success being the source.

A good read for anyone delving into the understanding of financial statements.
★ ☆ ☆ ☆ ☆
ben harack
The author shows you a made up balance sheet with low debt and high retained earnings and a second balance sheet with high debt and low retained earnings...and voila, now you know how Warren Buffett invests. Not sure who would find this book useful. Caters to beginners, but I mean beginners. If you've been through even a single accounting class just don't bother.
★ ★ ★ ★ ★
robin
This book was extremely helpful. I am 12 years old, and had no idea whatsoever on how to find a money-making stock. This book simply explained how to interpret financial statements, and use the information to select the perfect investment. It was put in very easy to comprehend, simple terms. The book was definitely written for beginners, and it accomplishes the goal.
★ ★ ★ ★ ☆
maria spasojevic
I found this book to be very interesting and an informative investing book. Some investing books can be overwhelming; using terms and formulas that don't make sense and you can't understand where they came up with the numbers they are discussing. You won't find that with this book. This is a small book compared to some with only 173 pages however the layout is wonderful. Within the 173 pages are 57 chapters-that is a little over 3 pages a chapter and it includes a glossary of terms in the back of the book. With these easy to follow and to the point discussions, I could read a chapter and then go straight to [...] Money; pull up the financial statements and look at exactly what I just read. The formulas in the book makes sense and are easy to do myself. I can figure out what the Gross Profit Margin or Net Worth of a company I'm interested in and if it's worth purchasing.
Can we all invest like Warren Buffet? Not exactly, however we can understand the concepts and information to look for so we can make a smarter decision in purchasing our investments. I recommend this book and wish you all the best with your investing future.
★ ☆ ☆ ☆ ☆
jesse prupas
I bought this book to add to my library hoping that there will be some useful information. 80%-90% of the book contains basic description of financial statements and partial financial statements. None of the given advice mention the notes to the financial statements in which all the funny stuff is published.

A good read of publications by Benjamin Graham would provide with useful information--if you are a value investor. Please be careful if you are going to read this book and invest any money because it will be dead money less the cost of this book.

In my opinion the author critizes investors like Baruch without any knowledge of their techniques. This proves the lack of knowledge and the insufficiency of research conducted by the author in writing about investing.

Good luck to anyone who finds this book useful. Others please try to find a better use for your money.
★ ★ ★ ★ ★
suzanna
This book is valuable! Think if you were Warren Buffett and looking for a company to invest. How does Buffett choose a company? How about yourself? This book tell you how. By studying this book, you should be able to identify a good company and a crap one. This is how Buffett invests.

Look! On the other side of reading this book, instead of looking at outside, it can teach how to look inside your own. What about your own company? As an entrepreneur, I also use the book as a financial health check list to improve my company. Some said information in this book is too simple and too common. (Everyone should know.) You are right! But you know what! Simple is understandable and usable. Complicated is only interesting. I believe Warren Buffett is a simple guy and that is why he's RICH. Hello Complicated! How much you got? Talking is cheap. (Doing is different!)

Thanks for reading. Get a book. It's worthy and valuable. Trust me!
★ ★ ★ ★ ★
alyson gerber
Perfect read for someone starting to analyze financial statements and learn about ratios needed to decide whether looking at a strong business or a company headed to bankruptcy. All warren analizing techniques describes in a easy read.
★ ★ ☆ ☆ ☆
hassan wasim
This book is more like a copy and paste of some "reading financial statement for dummies" book. Or maybe worse, since the balance sheet on it is not even balanced. When I first saw that, I thought my b-school education was too out-of-date, and maybe today's companies were using unbalanced balance sheet (especially for Mr. Buffett to read)

Basically, the whole point in this book is, look for companies that have high gross profit margin, have low (or no) capital expenditure or R&D expenses, low leverage, and no dividend payment. Are these rules-of-thumb for never-fail investment? I really doubt that.
★ ★ ★ ★ ★
ramnik chhabra
Financial statements hold clues about the future performance of a company, and Warren Buffett's quest to find such clues has put him among the ranks of the wealthiest people in the world, according to Buffett experts Mary Buffett (his former daughter-in-law) and David Clark. Seeing the interpretation of financial statements through Warren Buffett's eyes is both instructive and insightful. He routinely calculates meaningful financial ratios from line items in financial statements to distinguish the most promising companies from the rest. Although financial novices may have the most to learn from this book, the authors include savvy bits of "Buffettology" for more seasoned investors' benefit. getAbstract recommends this book to readers who want a basic introduction to financial statement analysis and, perhaps more importantly, who want to learn how "the Oracle of Omaha" picks his winning investments.
★ ★ ☆ ☆ ☆
ashrith
This book is okay for very rookie beginners, and it has some things that the intermediate investor should know, but I really don't think it accurately depicts what Mr. Buffett looks for in companies. She mentions that he looks for durable competitive advantages, which is true, but she makes no mention of his disgust of GAAP reports. She makes no mention of owner earnings or Free Cash Flow, which is what Buffett is famous for. I didn't buy this book, nor did I read the whole thing, but I scanned it last night at a book store and basically what this book is is a very Freshman course on reading financial statements with the name "Warren Buffett" attached to it. It is merely a book meant to sell a lot of copies just because his name is on it.
★ ★ ★ ☆ ☆
ajinkya kolhe
Mary Buffett trades on her former daughter-in-law status vs. Warren Buffett to write books about his methods and insights. Readers have to take her word for the accuracy and inclusiveness of her material - having read "Snowball" and other sources I suspect Mary's assertions are not as accurate or inclusive as one would wish, but they're better than nothing.

The book's primary assertion is that Buffett looks for a sustainable competitive via financial statement data; he is especially focused on finding those with a low-cost advantage.

Buffett purportedly begins by looking at a firms income statement, seeking high gross margins. Good examples include coca-Cola @ 60%, Moody's @ 73%, Burlington Northern @ 61%, and Wrigley's @ 51%; G.M. (21%), Goodyear (20%), and United Airlines (14%) provide unattractive examples. Sustained high gross margins (eg. ten years), not just one year, are required.

Buffett then moves to Selling, General and Administrative Expenses. Coke spends an average of 59% gross profit in this area, G.M. 28-83%, Ford 89-789%. As for R&D, Coke and Moody's have none, Depreciation - Coca-Cola 6% of gross, Wrigley's 7%, P&G 8%, vs. G.M. 22-57%. Interest Expense at P&G runs about 8% of operating income, 7% at Wrigley, vs. 49% at Goodyear. Wells Fargo pays out 30%, relatively high, but also the lowest of the top five banks (industry average = 70%).

Buffett is not interested in extraordinary income - eg. asset sales. Net Earnings/total revenues should be on an upward trend over the past ten years - Coke = 21%, Moody's 41%, SouthWest Airlines 7%, and G.M. 3%

Buffett prefers stock buybacks to dividend payouts due to the better tax treatment.

Finally, Buffett does not follow the crowd - buy in a bear market, sell in a bull (P/E/ ratio > 50).

The book goes on to examine cash flow and balance sheet issues, but there the treatment is less precise and useful.
★ ☆ ☆ ☆ ☆
ekaterina lyubomirova
Mary Buffett's fortuitous choice of a surname and gravy-training of her ex-father-in-law are her only qualifications for writing this dreadful excuse for a book.

The book is loaded with inaccuracies, the primary being this: she attempts to educate the reader by referring throughout the book to a fictional balance sheet, listing current assets, depreciation et al.

Here's the thing: her balance sheet DOESN'T BALANCE! The assets don't equal the liabilities plus the shareholder's equity. Anyone with even a rudimentary knowledge of accounting knows that that can't be.

Another gem is when she says that smart investors invest in companies with a natural near-monopoly, that essentially have a market to themselves. She then lists some companies that allegedly fit that criterion. The first two companies she lists are...wait for it...

Coke and Pepsi.
The classic textbook example of two rival companies that produce an almost identical product, and Mary Buffett lists each as her example of a company that has a market to itself.

The writing style is annoyingly redundant, patronizing and just flat-out wrong. It's amazing that it took two "writers" to put together such a rotten book. You're better off buying nothing.
★ ★ ★ ★ ★
tako tam
The book contains a very detailed approach to financial statement analysis for making investment decisions. However, it explains the detail in a practical/common sense manner, which makes it easy to read and easy to comprehend even for someone who is not familiar with financial statements. For someone who is familiar with financial statements, but doesn't know how to use them to make investment decisions, this is what they need to read. It will permanently change the way they review financial statements and the value they place on them.
★ ★ ★ ★ ★
brent abell
easy reading the book explains why and how buffett looks at financial information to increase return on investment. good book
★ ★ ★ ★ ★
harj dhillon
Don't believe the criticisms in the comments here. This is actually a very good book. I'm a small investor and I've made money. The fact that the balance sheet doesn't "balance" is an embarrassing typo, but it has no effect on the information presented.
★ ★ ★ ★ ★
chris farmer
Warren Buffett is an Indigo Accumulator in the Wealth Dynamics / Wealth Spectrum system for entrepreneurs and investors. This book, however, is not just for people wanting to understand how Buffett analyses financial statements. It is a very useful insight for any entrepreneur looking to build lasting competitive value in their business, and who understands that competitive advantage needs to be as easily read in your financials as it is in your marketing.
★ ★ ☆ ☆ ☆
debishima
Having read the favorable reviews on the store, I was really looking forward to reading this book. Suffice it to say, I'm having buyer's remorse.

Buffett basically walks through the basic financial statements, caption by caption, and explains what each account represents. If you have no experience whatsoever with financial statements, this book may be helpful. However, I found it analytically shallow and it basically consists of a description of the account and a high level blanket statement on "what Warren likes." Unfortunately, the "what Warren likes" sections are quite unsubstantive ("Warren loves companies that make a lot of money!") and I think this book fails to make the link between financial statement analysis and durable competitive advantage. From a financial statement analysis standpoint, there is absolutely nothing in this book that you couldn't get for free off of Wikipedia and from an investing methodology standpoint you're much better off going to the primary sources (ie Graham and Dodd, Phil Fischer, BRK shareholder letters).

I can't really think of a time when I've been more disappointed in a book and I definitely feel like I wasted my money.
★ ☆ ☆ ☆ ☆
jianred faustino
Mary Buffett married Warren Buffett's son Peter. She is also the mother of the ungrateful and self-entitled "Nicole Buffett", who appeared on Oprah and said she though Warren Buffett was selfish for not sharing his money with her instead giving it all away to charity.

The motivations of the book are not to help you financially, but to help her financially. It's plain to see, and funny that so many people, including myself were tricked into this book because of the author's name.

Voting Machine, meet Weighing machine
★ ☆ ☆ ☆ ☆
brian jorgensen
Written towards an 8th grader audience. So unless you're an 8th grader then it'll be a total waste of your time. This book takes a 30 item financial statement and somehow expands it into a 175 page book when most people could have explained succinctly in 30 pages or less.
★ ★ ★ ☆ ☆
antoinette
This is not a book for those who are intimately familar with financial analysis. Rather, it's a great refresher or a book for a person who is beginning to understand financial statements. In general, business books are hard to read and this one makes it a bit easier to learn and understand the material.
★ ★ ★ ★ ★
evelyn meneghin
This book was a complete revalation - and it is brilliant! The authors walk us through the financial statement as if Warren Buffett were at our side explaining things as he works his way through the numbers. They even show us where on the balance sheet that we could have seen where the investment banks were setting themselves up for disaster. It is a far more timely book than the Graham book. The main focus of the book is how Buffett uses a company's financial statement to help him identify if the company has what Buffett calls a Durable Competitive Advantage - the kind of company that will make us super rich over the long run. They also get into how Buffett determines the right price to pay for the company - so we don't end up paying too much for it. I highly recommend this book to any one that is interested in a sane way for make fortune. Happy reading!
★ ★ ☆ ☆ ☆
krista hobdy
You will hear these three words at least 100 times ! ..and I am not kidding. The book completely lacks depth.
★ ★ ★ ★ ★
steff
One of the best book
★ ★ ★ ☆ ☆
siddhesh ayre
I have noticed that several of Warren's recent stock purchases go against almost everything explained in this book.
★ ★ ★ ★ ★
alli schultz
This book is like a checklist of exactly what to look for when evaluating stocks. I'm so excited to have read it because the market right now is full of Warren Buffett opportunities and I know how to find them!! I just got my MBA and I learned more from these 200-some pages about how to pick a stock than I did getting the degree. Like Buffett and Clark's other books, this one has a clarity and focus that makes it a quick, enjoyable read. Five stars!
★ ★ ★ ★ ★
fakhri
This book was great. It finally shed light on something I've always wanted to know how to do -- read a financial statement. Buffett's never been more relevant than he is today. After reading this, I feel like I have some control over what happens to my finances in this scary time.
★ ★ ★ ★ ★
raji srivastava
I had read Buffettology and heard this book was out. Buffettology was written with such clarity and I had high hopes for this book as well. I was not disappointed. This book delivered! In these times it is extremely helpful for me to be able to understand Buffett's financial strategies.
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