The “Durable Moat” Diagnostic – A qualitative scoring system to assess whether a company’s competitive advantage (brand, network effects, patents, cost structure) will survive the next 20 years. Companies that score below 4/10 are discarded, no matter how cheap.
One of Montier’s specific contributions in the book is the C-Score, a tool designed to detect companies manipulating their earnings or engaging in accounting fraud. The C-Score looks for six red flags:
Montier advocates for simple, robust screening methods rather than complex modeling.
The Iceberg Screen – A quantitative filter for finding hidden assets: excess real estate, underfunded pension assets, or valuable subsidiaries that the market is ignoring because they’re buried in footnotes.
Overview