Warren Buffett Should Consider Goldman Sachs... Again

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While some including Morningstar analyst Michael Wong expect that in 2013 Goldman's strong debt underwriting and trading revenue may tail off, the prospect of an increase in merger and acquisition activity as corporations attempt to take advantage of low interest rates may play to the investment bank's favor.

In fourth quarter earnings, Goldman's individual investment banking, equities trading and fixed income currency and commodity trading units all beat estimates.

Full year investment banking revenue was nearly $5 billion, a 13% gain from 2011 levels, while Goldman's Institutional Client Services revenue was $18.12 billion for the year, a 5% increase. Those units and Goldman's equity trading business gained between 36% and 64% in the fourth quarter, when compared with year-ago levels.

Prior to earnings, Bernstein Research analyst Brad Hintz forecast $2.3 billion in net institutional equities revenue, $1.7 billion in net fixed income currency and commodity trading revenue and $1.2 billion in net investment banking revenue, in line with Goldman's previous guidance.

Return on equity, the percentage Goldman earns by reinvesting its retained earnings, came in at 10.7 %, beating a full year estimate of just over 9%. For the fourth quarter ROE was 16.5%, beating an estimate of 10.3%.

Given Goldman's far better than expected growth figures and its management of expense, Buffett might be well suited to take a look at investing in the investment bank. Meanwhile, Goldman's falling share count and growing earnings per share fall in line with some of Buffett's top investing principles.

For more on Goldman Sachs see why the company's bottom line will be its key earnings driver in 2013 .

-- Written by Antoine Gara in New York