I came across this really good article the other day, and thought it would be great to share it with all of you. The main point of the article was to compare 2 different companies, one that is unable to grow anymore but still has a comparative advantage and hence legacy moats, while the other is still able to grow at a high rate and thus possess reinvestment moats.
In reality, the company with the reinvestment moats are likely to be more expensive and hence results in many value investors like myself to pass them by. Good examples would include Google and Amazon, or even Facebook. That being said, I do not really like buying overvalued companies, because there is more often than not, a lack of margin of safety. However, I am still thinking about allocating maybe a small portion of my portfolio to high growth companies, because once you find a good one, the price can increase 100x over a few years.
Thus, I feel that value investing has to strike a balance between the net-nets vs the growth companies. Be flexible, and make decisions based on the underlying business fundamentals and where it would be in the next 10 years, but also keep in mind whether the business possesses a margin safety.