Course 507: Great Investors: Warren Buffett
High ROEs
In this course
1 Introduction
2 Easy to Understand Businesses
3 High ROEs
4 Consistently Strong Free Cash Flows
5 Limited Debt
6 Quality Management

Buffett emphasizes return on equity (ROE), the most common measure of a company's profitability. Buffet likes companies whose ROEs he can forecast at least 10 years out. He is particularly fond of firms that don't require a lot of capital to produce a high ROE, which is what drew him to Washington Post WPO. The Post's ROE rarely fell below 15% (twice that of the average publisher) in the 1990s. The Post's superior ROEs stem largely from the fact that newspapers are cheap to produce but can command a lot for ads.

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