Buffett: Owner Earnings Yield

Buys on Buffett’s pricing discipline: a good business is only a buy when the cash the owner could actually withdraw yields a decent return on the purchase price. The measure is free cash flow over the last four quarters: it has to be positive and worth at least 5 percent of market cap — so the market values the company at no more than twenty times that cash. On top comes the quality baseline: at least 15 percent return on equity, at least 10 percent of revenue as operating profit, and debt of no more than half of equity. Only shares our own deep-dive analysis rates green are bought — yellow or no analysis at all is not enough. New positions are added once a month; a stock is sold as soon as it no longer meets one of these conditions or is no longer rated green.

This portfolio buys shares.