They also look for high return on equity, which they say is an important measure of management performance.
One way that my Buffett-based model identifies companies with a durable competitive advantage is by looking for high returns on equity, and Goldman fits the bill.
Carlos Santos Ferreira, chief executive of Millennium BCP, one of the country's biggest banks, warned that stricter capital requirements would lower profitability, pushing investors to search for higher returns on equity elsewhere.
"The Hartford's sharper focus will lead to an organization that, over time, will be positioned for higher returns on equity, reduced sensitivity to capital markets, a lower cost of capital and increased financial flexibility," Liam E. McGee, the company's chairman and chief executive, said in a statement.
WebBank, a small bank in Utah, achieves one of the highest return-on-equity metrics of any bank by providing an analogous service for marketplace lenders.
One investing rule of thumb says to look for companies with high returns on equity.
Validea's Buffett screen looks for earnings predictability, a high return on equity, strong free cash flow and share buybacks.
The fund, led by a group of six managers, looks for growing companies generating high returns on equity and invested capital, but seeks to buy them when they are out of favor and selling on the cheap.
He noted that the oldest branches (eight-nine years old) have cost/income ratios of 30% (ie below the average for the Swedish branches) and very high returns on equity.
Although she's got a new employer, Stevens is still searching for companies with the same characteristics as always: high returns on equity, clean balance sheets and a catalyst to trigger growth.
