Course 507: Great Investors: Warren Buffett
Consistently Strong Free Cash Flows
In this course
1 Introduction
2 Easy to Understand Businesses
3 High ROEs
4 Consistently Strong Free Cash Flows
5 Limited Debt
6 Quality Management

Buffett is also a stickler for free cash flows, or the money that a company has left over after it has paid the bills and invested in its growth. This "mad money" is one of the main ways in which stock-pickers gauge a company's financial health. TCA Cable, for instance, was not the typical Buffett stock when he bought it in 1999, because at the time the stock was very expensive. Nonetheless, TCA had a brief stint as a Berkshire holding (before it was acquired by Cox Communications COX later that year) because Buffett liked TCA's free cash flows--$131 million in fiscal 1998. Consistently strong free cash flows mean that a company is generating real cash for its owners.

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