Buffet's annual l
etter to the shareholders clearly outlines his investing philosophy. And as you read them over the years, he addresses his concerns and owns up to his mistakes.
While he has made great fortunes holding large positions in large companies (think Coke), I'm most impressed by his acquisition strategy. Coming from the position of someone that has been involved in nearly 30 transactions, his approach is a breath of fresh air. He finds well-run companies in basic industries with good management teams and solid fundamentals. He and Charlie Munger typically make a decision to pursue acquiring a company in about 30-60 minutes. After closing a fair deal (it's certainly easy when you have a large checkbook and don't have to burden your acquisition with debt) he let's management run the company. As he states in his annual reports, most of the CEO's that run Berkshire companies have no financial need to work. Through the initial acquisition most become independently wealthy. Yet given an opportunity to run a business judged on their ability to deliver promised results, virtually all have stayed when given the opportunity run a business in this structure. Because they ran a good business before Berkshire acquired them, so the logic goes that they'll run a good business when left to their own devices. This contrasts with typical corporate acquisitions where there is pressure to achieve "synergies" (investment-bank speak for cost-reductions through labor or location consolidation) and/or pay down debt load plus the influx of new managers that "know how to run the business better" more often then not destroy shareholder value.
I find it even more inspiring that he took the lesson of a younger man, Bill Gates, and decided to start transferring his wealth to the Gates Foundation with the stipulation that it be spent quickly - rather than creating his own foundation after his death. The two of them have set a philanthropic example that hopefully many others that have profited from the historic increase in personal wealth over the past few decades will follow.