📖Li Lu
Quality Business Criteria
Quality businesses compound wealth and reduce risk.
Invest in businesses with durable competitive advantages, strong cash flows, and management integrity. Quality businesses compound wealth over time and reduce downside risk.
🏠 Everyday Analogy
📖 Core Interpretation
Li Lu emphasizes durable business quality over short-term noise. A strong model, real competitive edge, and disciplined capital allocation matter more than quarterly excitement.
💎 Key Insight：Durable advantages and good management create superior returns.
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❓ Why It Matters
Without business-quality filters, investors drift toward stories rather than economics. Durable cash generation is what supports long-term valuation.
🎯 How to Practice
Use a checklist covering moat, management, unit economics, and capital allocation; track long-term cash generation instead of quarter-to-quarter noise.
⚠️ Common Pitfalls
Buying narratives instead of cash-generating economics
Overreacting to short-term operating noise
Ignoring management quality and capital allocation
📚 Case Studies
1
BYD Investment Amid Panic (2008)
During the global financial crisis, Li Lu invested in BYD after deep due diligence on technology, management, and unit economics, despite widespread pessimism on autos and China.
✨ Outcome：BYD became a multibagger over the following decade, validating his intellectually honest, evidence‑driven thesis.
2
BYD Early Investment (2004)
Li Lu’s Himalaya Capital invests in Chinese battery and handset maker BYD, recognizing its advantages in batteries, management quality, and long‑term EV potential.
✨ Outcome：Position held and increased; Berkshire Hathaway later invests in 2008, and BYD becomes a multibagger over the following decade.
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