In May 2025, I attended the Berkshire Hathaway Shareholders Meeting in Omaha, Nebraska. This marked my fifth meeting, with my first experience dating back to 2017, and once again, it was filled with invaluable insights. As a continuous lifelong learner, I deeply appreciate the wisdom Warren Buffett shares – not only about investing principles, but also about life principles.
One of this year’s most important investment lessons from Buffett was his emphasis on the balance sheet as a starting point for evaluating companies:
“I spend more time looking at balance sheets than I do income statements. And Wall Street really doesn’t pay much attention to balance sheets, but I like to look at the balance sheets over an eight- or ten-year period before I even look at the income account, because there’s certain things that are harder to hide or play games with on the balance sheet than you can with the income statement. Neither one gives you the total answer on anything, but you still ought to understand what the figures are saying and what they don’t say, and what they can’t say, and what the management would like them to say that the auditors wouldn’t like them to say. I mean there’s just a lot to be learned and you do learn more from balance sheets in my view than most people give them credit for.”
(Buffett, 2025)
At Franklin Watson Investments, I have always prioritized understanding the fundamentals of the businesses we invest in, with a focus on the balance sheet, income statement and cash flow statement. Buffett’s perspective reinforces the critical importance of initially focusing on the balance sheet. Inspired by his wisdom, I am committed to conducting an even more rigorous analysis of balance sheets – reviewing data over an 8- to 10-year period whenever available – to gain a thorough understanding of our investments and to uncover any potential financial shenanigans.