The Warren Buffett Way by Robert G. Hagstrom

Business Tenets

1.      Is the business simple and understandable from your perspective as an investor?

2.      Does the business have a consistent operating history?

3.      Does the business have favorable long-term prospects?

Management Tenets

1.      Is management rational?

2.      Is management candid with its shareholders?

3.      Does management resist the institutional imperative?

Financial Tenets

1.      Focus on return on equity, not earnings per share.

2.      Calculate “Owner Earnings”.

3.      Search for companies with high profit margins.

4.      For every dollar of retained earnings, has the company created at least one dollar’s extra market value?

Value Tenets

1.      What is the value of the business?

2.      Can the business currently be purchased at a significant discount to its value?

(Notice how this follows what was stated by Warren Buffett on CNBC)