Pat Dorsey - Buying Companies With Economic Moats - [Invest Like the Best, EP.51]

In this episode of Invest Like the Best, Patrick O'Shaughnessy interviews Pat Dorsey, former Director of Research at Morningstar and founder of Dorsey Asset Management, about economic moats and capital allocation. Dorsey defines moats as structural business characteristics that insulate a company from competition, allowing for high rates of return on reinvested capital. They discuss four key categories of moats: intangible assets (brands, patents, licenses), switching costs, network effects, and cost advantages, and how to identify and measure them. The conversation also covers how the market misprices moats, the importance of a long-term investment horizon, and the critical role of thoughtful capital allocation in maximizing shareholder value. Dorsey emphasizes that strategy and capital allocation should serve to strengthen the moat, and that companies should focus on reinvesting in their moats to generate future returns.