A recent Barron’s article profiles fund managers of the Madison Mid Cap fund, which has beaten 95% of its peers in the past three years and 85% in the past 15 using Warren Buffett’s strategy of buying “great companies at a cheap price.”

Two of the managers, Rich Eisinger and Haruki Toyama, met in the 1990s at Cornell University’s business school. A third co-manager, Andy Romanowich, joined in 2019.

The article notes that Eisinger’s investment style (like Buffett’s) has shifted from that of just finding cheap stocks to finding strong businesses with good cash flows. Eisinger explains: “Over time, we’ve realized, especially in the mid-cap space, the value of paying up for a great business and watching that free cash flow compound over many years.”

The fund is also concentrated, with just 29 stocks as of September 30—another hallmark of Buffett’s strategy.

“To make it into the portfolio, the article explains, a company “should have a strong business model with an ‘economic moat’ that prevents competitors from reducing profits. It must also have a superior management team with preferably strong insider ownership, conservative accounting and earnings projections, and a history of wise capital allocation decisions regarding share buybacks, acquisitions, and debt repayment. Finally, the valuation must be reasonable for a strong business.”