Warren Buffett's Genius...

My term project in one of my Masters classes is to fully analyze and reformulate a publicly traded company's financial statements - for at least 8 years. Immediately I knew which company I was going to choose - Berkshire Hathaway.

With Berkshire's annual reports being 75+ pages long each year, I've only read through 2 years, so far. (Plus I need to find more recycled paper to print on. Save some trees and all.) And already, I can see Warren Buffett's genius shining through. The "Oracle from Omaha," as he's so belovedly called, is the single greatest investor in this lifetime - I think anyway. His annual report and letter to shareholders are filled with humor and just an overall great feel to it.

A sample of his genius and hilarity (all directly quoted from the 1998 annual report):

"If we are to disappoint you, we would rather it be with our earnings than with our accounting." [on fraudulent accounting practices to make earnings estimates]

"If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And, if expenses shouldn't go into the calculation of earnings, where in the world should they go?"

"Here, I need to make a confession (ugh): The portfolio actions I took in 1998 actually decreased our gain for the year. In particular, my decision to sell McDonald's was a very big mistake. Overall, you would have been better off last year if I had regularly snuck off to the movies during market hours."

"Berkshire's primary investment strategy contemplates that most equity investments will be held for very long periods of time. Thus, Berkshire management is not necessarily troubled by short term price volatility with respect to its investments provided that the underlying business, economic and management characteristics of the investees remain favorable."

"As for the allocation of capital, that's an activity both Charlie [Munger, Vice Chairman of Berkshire] and I enjoy and in which we have acquired some useful experience. In a general sense, grey hair doesn't hurt on this playing field: You don't need good hand-eye coordination or well-toned muscles to push money around (thank heavens). As long as our minds continue to function effectively, Charlie and I can keep on doing our jobs pretty much as we have in the past"

Mr. Buffett knows his limitations and isn't afraid to praise his subsidiaries' managers for their talent and ability. And from reading these annual reports, you honestly get the feeling that no matter how small a position you own in Berkshire, he still considers you a full-on owner of the company.

Corporate America would be a totally different scene if every CEO was as flexible and ingenious as Mr. Warren E. Buffett.

I'm such a fan now.

p.s. If I don't write for awhile, that means I'm still up to my ears in annual reports.