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Tom's Stock No. 1


Reading through the company description on the Danaher [NYSE: DHR] website doesn't get you any closer to understanding what the company actually does. In its words, it's "a diversified technology leader that designs, manufactures, and markets innovative products and services to professional, medical, industrial, and commercial customers." In short, Danaher makes stuff.

More importantly, it's a consummate consolidator, an industrial conglomerate that buys poorly run companies and cleans them up. And it exemplifies several of the principles that Tom regularly calls upon in his investing research.

  • The men who founded the company are still involved and invested.
  • It isn't sweating quarterly results, rather it has a clear vision of how it will achieve success over decades.
  • It is focused on processes, not on the outcomes.

Building a Business for Life

As Tom said of the businesses that most appeal to him, "It starts with a passion, it starts with something you believe, and you give your life to it, rather than just try and start up something great, raise money, and sell it to somebody else." CEOs such as Jim Sinegal of Costco [Nasdaq: COST], Kip Tindell of The Container Store, and Jeff Bezos of [Nasdaq: AMZN] are making decisions based on what they will mean for their companies 10, 20, or 50 years down the road.

Nearly three decades ago, while fishing on the Danaher, a tributary to the Flat Head River in Montana, Mitchell and Steven Rales came up with their vision of a manufacturing company dedicated to continuous improvement and customer satisfaction. Today, Mitchell is chairman of Danaher's executive committee and Steven is the chairman of the board.

It's All About the Process

The company has acquired hundreds of compan