This is one of the best books to read for long term investors
Quality investing : owning the best companies for the long term.
by Lawrence A. Cunningham,Torkell T. Eide, Patrick Hargreaves.
While the whole book was a fantastic read, one thing I really found useful was patterns they shared to look in quality companies.
When looking for quality companies, the desired outcome is always clear: strong, predictable cash generation; sustainably high returns on capital; and attractive growth opportunities. Yet the building blocks that enable companies to achieve these results vary widely,
Examine these routes, however, and patterns emerge – similar combinations of strategies, techniques, or capabilities that transcend companies or industries,
Patterns are great reusable templates and ones which can be used successfully across different companies and sectors. This then becomes an essential tool kit to develop in search of finding quality companies. Let’s learn some of the patterns discussed in the book
- Recurring Revenues
Recurring locked in revenues lead to predictable cash flows and in turn exhibit business quality, Keep below the table in mind
| Type | License | Service | Subscription |
| Common In | Large Software Companies | Industrial Companies | Marketing, Software as Service companies, Platform Business |
| Key Success Factor | The software |