Book value less than zero?
...
Yup. Rather counterintuitive.
Jim explained the rationale, although I can't find that post just now.

Another simple way to think of it:
How many dollars of net assets does a business need to make a buck per year? Fewer is better, that's a high ROE.
If a firm needs no net assets at all (and yet is still stable and profitable), that's like an infinite ROE.

Firms with negative book and consistently positive earnings tend to be very good businesses, and statistically good investments.
Coke, Moody's, McDonald's, tobacco firms (ick), Dell.
Usually they have paid out all their equity as dividends, and then keep on going.

Here's a screen I tested in the VL universe:
Current EPS > 0
EPS trailing 12 months > 0
Projected EPS growth rate > 0
Book per share < 0
Final sort on absolute size of cash pile -- a bit of resilience never hurts. Other things being equal, I'd rather own a big cash-rich firm than a small cash-poor firm.

Top 5 monthly 1997-2024 beat the S&P by 9.9%/year, with remarkably steady returns. Only 63% of the risk of SPY using the DDD3 metric.
Turnover is very low, as none of the criteria change very often.

Often very few stocks in the VL set passed the tests prior to the credit crunch, so the final sort wasn't doing much back then.

Jim