@A_shah
Moats can be in the form of
Brand moats ā examples are eicher, FMCG brands, consumer durables brands like AC, fans, other stuff like mixers, grinders, so on and so forth, cigarettes, alcohol brands, etc. There are different brands in different segments that dominate the segments. Brands moat mean anything only if the company is able to monetise that brand into higher sales and profits. e.g Hawkins has not gone anywhere inspite of a strong brand partially due to lacklustre sleepy management.
Secrets, patents moats ā examples are products like Coca Cola, products of companies like 3M, some company products of companies like Dow Chemicals etc. These secrets when protected by patents are strong moats. Even new drug entities like products (NCE new chemical entities) from pharma companies are secrets enjoying patent advantages but these last for few years and in countries where patents are not followed strictly they dont amount to much.
Toll bridge moat ā If there is only one way to reach destination then that way or bridge enjoys a moat. e.g Noida toll bridge till a new bridge came up and destroyed the moat. A pipeline which can be used only exclusively and where no other pipeline is allowed to be laid by govt direction or economic considerations.
Switching moat where cost of switching from one supplier or product to another is quite high. e.g exchanges like NSE, BSE etc, softwares like microsoft, products like iphones (with the whole environment of apple products and services, but it is not so strong as others like microsoft or exchanges).
Price moat where a company is one of the lowest cost or the lowest cost producer of a product. If the product is a non cyclical and is a consummable and needs regular buying then it becomes a strong moat.
Among all these moats, the secrets moats protected by strong enforcable patents seems to be strong moat. Lowest cost producer in a non commodity product also could be a strong moat. Brand moats are gradually succumbing to disruptive marketing and sometimes there is what is coined as brand fatigue. e.g the older models of brand eicher gradually lose their hold over the people and company has to launch new improved versions of the same products to keep the buyer interest intact.
Ideal company to invest in is a company having multiple moats. Companies like coca cola with strong brands assisted by very good distribution and trade secrets become very strong moats.
Coming to second query, I think figuring out path for growth of a company and scalability and growth stickiness comes out of studying successful companies and finding out how they have suceeded over time.
Regarding new investors having a concentrated portfolio, there is no definite right or wrong answer. It all depends upon oneās investing style. Some people like me are comfortable with concentrated investing and others are more comfortable with diversified investing and each style has lot of successful investors who have followed it.
