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"Hagstrom says that when Buffett calculates Return on Equity, he values marketable securities at cost so as to remove the effects of the capricious stock market on the net worth of the company and therefore the return on equity."

I think that this is more of a concern with financials or large conglomerates than with most run of the mill industrials, retailers, etc.

For any company where it is a concern, investments carried at market ("marketable securities") should be presented at both market as well as cost basis. Look in the notes to the financial statements that immediately follow the financial statements in the 10-K. One section should provide detail on their investment portfolio. The information on their cost basis should be in that section.

Is there a specific company that you're studying? It might be more strightforward to just name that company and someone can hopefully find that info and point you to where it lives. Many 10-Ks follow very similar formats, but nuances in how they're organized can and do exist.

Peter

(A more populated board that deal with these things is "Reading Financial Statements":

http://boards.fool.com/reading-financial-statements-100104.a...

It's still somewhat sparsely populated, but has more readership.)
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