/ 13 May 2008

Buffett: America’s favourite capitalist

If there is anything more satisfying than being rich, it must be basking in the glow of being proved right. The world’s wealthiest man, Warren Buffett, was lauded by 31 000 devotees in his home town last weekend for eclipsing the biggest brains on Wall Street through his homespun approach to business.

The so-called Sage of Omaha has warned for years that financial innovations such as derivatives, credit swaps and repackaged debt were a disaster waiting to happen.

Buffett favours a straightforward perspective on investment. “If you’re going to buy a farm somewhere near Omaha, you wouldn’t get a different price set every day,” Buffett told the annual meeting of his Berkshire Hathaway empire. “You’d look at the yield, the cost of the assets, the price of fertiliser. You’d decide what it was worth on the basis of what its earnings will be.” When Buffett wants to invest in a business, he has little time for hedging his way in through “long” or “short” options: “If we want to buy something, we’ll just buy it. If we want to exit, we’ll sell it. We won’t get involved in these fancy techniques.”

In a year that has proved catastrophic for Wall Street the Nebraskan billionaire’s fortune has increased by $10-billion to $62-billion. In Forbes’s annual rankings, Buffett overtook Microsoft’s Bill Gates and held off Mexican telecoms magnate Carlos Slim to claim top spot as the richest individual on the planet. Shares in his insurance-based empire soared 29% last year as profits rose 20% to $13,2-billion.

This has boosted Buffett’s kudos as America’s favourite capitalist. The number of people at Buffett’s annual shareholder weekend was up 15% on last year’s record turnout, in spite of storms pounding the Midwest and throwing flight schedules into chaos. Some investors hastily rented cars with strangers to drive through the night from far-flung cities.

At Omaha’s Qwest conference centre, Buffett posed patiently as an artist “speed painted” him at six o’clock in the morning. Crowds flocked to stands promoting Buffett’s NetJets private planes, Justin Brands cowboy boots and Dairy Queen cafÃ