How does Berkshire Hathaway choose its investments?

Berkshire Hathaway selects its investments through a disciplined and value-oriented approach that has been shaped by the philosophies of its CEO, Warren Buffett. The company primarily seeks businesses that possess a strong competitive advantage, often referred to as an economic moat, which allows them to sustain profitability over time. These businesses typically demonstrate consistent earnings, reliable cash flow, and a strong management team. Berkshire Hathaway focuses on buying companies with fundamentally sound business models that offer good returns on investment. The organization emphasizes intrinsic value calculations, determining what a company is worth based on its future cash flows and profitability. A significant aspect of this process is conducting thorough due diligence, which involves scrutinizing financial statements, understanding the industry landscape, and evaluating the company's growth prospects. Additionally, Berkshire Hathaway often invests in industries it understands well, allowing it to make informed decisions. The company is also known for its long-term investment horizon, meaning it holds onto its investments for many years, if not indefinitely, as it believes in the enduring value of quality businesses. Those interested in the specifics of Berkshire Hathaway's investment philosophy can explore resources available on the company's current web page, which may provide further insights and examples of past investment decisions.