Investment Criteria We search tirelessly for companies with the following characteristics that foster long-term capital appreciation for shareholders: Strong, durable brands or franchises – Firms that build wide name recognition and consumer trust create a durable, competitive advantage yielding pricing power and market expansion opportunities. Outstanding leadership teams – A firm’s ability to grow is directly related to the ability of its leadership team to envision and implement appropriate strategies in the face of changing economic and competitive environments. Reasonable valuations relative to earnings, cash flow, assets and sales – Purchasing a stock at a sufficient discount to the intrinsic value of the business provides a margin of safety and thereby increases the probability of superior returns while minimizing risk. Consistent high return on shareholders’ equity – Companies that wisely invest their capital and reap superior returns on their investment generate solid long-term returns for investors. Strong balance sheets, preferably no long-term debt – Strong finances provide the staying power to weather difficult economic storms. Positive and growing cash flow – Strong cash flow allows a firm to seize growth opportunities and return cash to shareholders through dividends and share buybacks. Expanding profit margins – Companies with expanding margins focus on improving the efficiencies of their operations. By keeping costs low, these firms are formidable competitors. Long history of solid sales, income and dividend growth – A company with a long record of consistent growth has established a successful business model to deliver superior investment returns. Significant equity stake by management – Just as we “eat our own investment cooking,” we seek companies where the interests of management are aligned with shareholders.