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Goldman Sachs analysts complain of long hours, unrealistic deadlines
By: Reuters | March 18, 2021
NEW YORK (Reuters) - As Goldman Sachs Group Inc (NYSE:GS) cashes in on a boom in market activity, a group of first-year analysts have warned senior management that they are overworked and will quit within six months unless conditions improve, according to an internal survey circulated online.
While Wall Street is notorious for its tough culture, the survey provides a rare insight into just how grueling working conditions can be.
In it, the junior bankers said that they worked an average of 95 hours a week, slept five hours a night, frequently faced "unrealistic deadlines," and that their relationships with friends and family were feeling the strain as a result.
The survey, which began circulating on social media on Wednesday, was conducted by a group of 13 first-year investment banking analysts among themselves.
They presented their findings to Goldman Sachs' management in February, and the bank has since taken steps to address employee burnout, the bank said.
"We recognize that our people are very busy, because business is strong and volumes are at historic levels," Goldman spokeswoman Nicole Sharpe said in a statement on Thursday.
"A year into COVID, people are understandably quite stretched, and that's why we are listening to their concerns and taking multiple steps to address them."
The bank said it had as of January expedited hiring for new entry-level staff because it is conscious employee resources are stretched thin. But it takes time for new staff to be vetted, hired and to begin working, the bank added.
Buoyed by strong equity and debt underwriting, Goldman's investment banking business generated a record high $9.42 billion in 2020.
Goldman and other Wall Street banks have played a central role in a recent frenzy of special purpose acquisition company, or SPAC, deals. These shell companies raise funds through an initial public offering with a view to later buying assets.
Such "blank check" IPOs have already surpassed this year the $83.4 billion the sector raised in all of 2020, according to Chicago-based SPAC Research, which compiles data on such deals.
Wall Street has been criticized in the past for a hothouse culture that can dangerously overwork ambitious young staff.
In 2013, an intern at Bank of America (NYSE:BAC)'s Merrill Lynch's investment bank died after he allegedly worked for 72 hours without sleep. https://reut.rs/30U2sy7
A majority of the Goldman analysts in the survey said they felt they have been victims "of workplace abuse."
"There was a point where I was not eating, showering or doing anything else other than working from morning until after midnight," wrote one respondent.
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Goldman Reportedly in Talks to Issue JetBlue Credit Cards
By: TheStreet | March 18, 2021
Goldman Sachs (GS) is negotiating with JetBlue Airways (JBLU) to become the carrier's credit-card issuer, a media report says.
Barclays (BCS) currently issues the JetBlue cards and is talking to the Long Island City, N.Y., carrier about keeping it, knowledgeable sources told The Wall Street Journal.
Barclays may well win out, the newspaper said. The U.K. financial-services giant's contract with JetBlue still has another three years to run.
Goldman shares recently traded at $351.71, up 2%, after hitting an all-time peak of $356.85 earlier.
The New York investment bank's stock has soared 81% in the past six months, with its success in consumer banking playing a small role.
Goldman has chased after JetBlue for several years, one of the sources told the Journal. And it recently started offering a loan-payment option to consumers booking holidays through JetBlue Vacations.
The bank has expanded to consumer services in the past few years, beginning its Marcus division in 2016. Its first credit card came in 2019, partnering with Apple. (AAPL)
In 2020, General Motors (GM) changed to Goldman as its credit card issuer from Capital One (COF).
Balances outstanding on Goldman credit cards registered $4.3 billion in December, more than double the figure from a year earlier, The Journal reports.
JPMorgan shares joined Goldman in hitting a record on Thursday amid investors’ enthusiasm for the Federal Reserve’s laissez-faire attitude toward rising long-term interest rates.
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Goldman Sachs Lifts Price Targets for 4 Largest US Airlines
By: Paul Ausick | March 16, 2021
Before the COVID-19 pandemic hit the United States in March of last year, the country’s commercial aviation had celebrated a record-breaking year. U.S. carriers were flying 2.5 million passengers and 58,000 tons of cargo every day. At the end of February 2020, those totals had increased by 5%.
Then the bottom fell out and passenger traffic plunged 96% by mid-April, according to industry trade group Airlines for America. Passenger carriers reported pretax losses totaling $46 billion in 2020, and airline industry analysts are forecasting losses of $18 billion for 2021.
In testimony before the aviation subcommittee of the U.S. House Committee on Transportation and Infrastructure, Airlines for America’s president Nicholas Calio also said, “It took 10 years—from April 2010 to March 2020—for U.S. passenger airlines to add 83,000 workers to their payrolls. Sadly, it took just 10 months—from March to November—to shed 93,000 jobs.”
To make it through the pandemic-driven collapse of air travel, airlines have received loans and other assistance to help meet payrolls and keep workers employed. The recently passed rescue legislation included $15 billion for that purpose. Airlines themselves have issued notes and borrowed against their frequent flyer programs in order to maintain liquidity until coronavirus infection levels can be brought under control.
The recent passage of the COVID-19 relief bill includes an additional $15 billion for airlines to use to keep their workers on the payroll. The legislation sent shares higher last Friday, and most of the airline stocks posted new 52-week highs either Friday or Monday.
Here’s a look at how the country’s four largest airlines are positioned for reporting first-quarter results following price target increases announced Tuesday by analysts at Goldman Sachs.
Southwest
Southwest Airlines Co. (NYSE: LUV) is the largest U.S. carrier by market cap ($36.1 billion), more than double its level in May of last year, but still short of its peak of nearly $40 billion in December 2017. Revenue fell 60% year over year in 2020, and the loss per share totaled $6.22.
In the first quarter of last year, Southwest posted a loss per share of $0.15, and it is forecast to post a loss of $1.87 in the first quarter of this year. Estimated quarterly revenue of $1.97 billion is less than half the year-ago total of $4.23 billion.
The story improves for the second quarter, however. Analysts see the loss per share shrinking from $2.67 in the same quarter last year to $0.74 this year. The full-year loss is forecast at $1.97.
The stock traded at around $61, in a 52-week range of $22.47 to $62.76, and the consensus 12-month price target is $58.28. On Tuesday morning, Goldman Sachs boosted its price target on the stock from $47 to $69 and maintained its Buy rating. The highest price target on the shares is $71.
Southwest is not forecast to post a full-year profit until 2022 and currently trades at about 21 times expected 2022 earnings and 14 times expected 2023 earnings.
Delta
The second-largest U.S. airline by market cap is Delta Air Lines Co. (NYSE: DAL), which currently is valued at $31.92 billion. In mid-January of last year, the airline’s market cap reached $39.5 billion. Revenue fell by more than 63% in 2020, and the loss per share for the year was $10.76.
Next month the company is expected to report a loss per share of $2.71, compared with a loss of $0.51 in the first quarter of 2020. Quarterly revenue is forecast at $4.06 billion, a drop of nearly 53% from $8.59 billion a year ago.
As with Southwest, the second-quarter outlook brightens. Analysts estimate a net loss per share of $1.07, compared with a loss of $4.43 a year ago. The full-year loss is forecast at $2.76, an improvement of about 75% compared to a loss per share of $10.76 in 2020.
The stock trades at around $50, in a 52-week range of $17.51 to $52.28, and the consensus price target is $48.33. Goldman Sachs also raised its price target on Delta stock on Tuesday, from $35 to $47, and maintained a Neutral rating.
Delta is not expected to post a full-year profit until 2022 and currently trades at about 13 times expected 2022 earnings and just tight times expected 2023 earnings.
United
With a current market cap of around $19.2 billion, United Airlines Holdings Inc. (NASDAQ: UAL) is the third-largest U.S. carrier. At the end of 2019, the airline’s market cap was around $23 billion. Revenue collapsed by nearly 65% year over year in 2020, and the loss per share totaled $27.57.
When United reports first-quarter results late next month, analysts expect a loss per share of $6.87, compared with a loss per share a year ago of $2.57. Revenue for the quarter is pegged at $3.29 billion, a drop of nearly 59% year over year.
The second quarter looks better as analysts estimate a net loss of $3.17 per share, bringing the estimated first-half loss to $10.07. However, United’s full-year loss currently is forecast at $9.97, indicating that profitability is expected to return in the second half of the year. The forecasts for both Delta and Southwest indicate the same pattern.
United’s stock traded at above $60 Tuesday morning, in a 52-week range of $17.80 to $61.69 and with a consensus price target of $51.56. Goldman Sachs also has a Buy rating on United stock and boosted its price target from $54 to $74.
The shares trade at 18 times expected earnings in 2022 and about eight times expected 2023 earnings.
American
American Airlines Group Inc. (NASDAQ: AAL) has a current market cap of around $15.8 billion, making it the fourth-largest U.S. airline. That’s actually an improvement of about a third from its level of $11.8 billion at the end of 2019. Revenue fell 62% year over year in 2020, and American’s loss per share totaled $19.66.
When the company reports first-quarter results next month, analysts are looking for a loss per share of $3.93 on revenue of $4.05 billion. The per-share loss is about 50% worse than the quarterly loss a year ago, and the revenue total is down by 52%. Analysts expect American to post a full-year loss of $7.94 in 2021 on revenue of $25.6 billion, an improvement of about 48% year over year.
As with the other airlines we’ve looked at, the second quarter’s expected loss narrows, but the full-year outlook indicates that per-share losses will continue into the third quarter and maybe even into the fourth.
American’s stock traded at shy of $25 on Tuesday, in a 52-week range of $8.25 to $25.94. The consensus price target on the stock is $14.19. Goldman Sachs maintained a Neutral rating on American but lifted the price target from $11 to $20.
American is not expected to post a full-year profit until 2022, and the estimates range from $0.01 to $0.10. That works out to sky-high multiples. An expected profit per share of $1.91 in 2023 is about 13 times the current share price.
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Goldman Sachs Board Nominates Royal Dutch Shell CFO for Director Role
By: Elizabeth Dilts Marshall | March 15, 2021
• Goldman Sachs Board Nominates Royal Dutch Shell CFO for Director Role
If her appointment is approved by shareholders, Jessica Uhl will be the fifth woman director on Goldman’s board and its only member to come from the fossil fuel industry.
The bank has backed away from fossil fuel development in recent years.
In 2019, it said it would no longer finance certain drilling and coal activities and set a target of making $750 billion in loans, underwriting, advisory services and investments in projects that fight climate change or help financially disadvantaged people.
Shell, where Uhl has worked since 2004, recently vowed to eliminate net carbon emissions by 2050, as it prepares to expand its renewables and low-carbon business in the face of growing investor pressure on the oil and gas sector to battle climate change.
Goldman’s asset management arm has pushed companies in its investment portfolio to include at least one woman director since 2019, and its investment bank has required companies that it takes public have at least one diverse board member since 2020.
The group, which will hold its annual shareholder meeting April 29, is expected to face its own investor scrutiny on adherence to environmental, social and governance goals, and headlines about its chief executive’s personal travel and social activities during the quarantine.
“We are pleased to have a candidate of Jessica’s caliber who will enhance the diversity of skills and experience represented on our board,” Goldman CEO David Solomon said in a statement.
“We believe she is well-positioned to provide advice and insight across a broad spectrum of topics, from strategic development to the management of climate risk.”
(This story corrects the date of bank’s shareholder meeting to April 29 (not April 30) in seventh paragraph)
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Goldman Sachs customers' demand for bitcoin rising: COO
By: Reuters | March 10, 2021
NEW YORK (Reuters) - Goldman Sachs Group Inc (NYSE:GS). is exploring how it can meet rising customer demand to own and invest in bitcoin, while still staying on the right side of regulation, bank President and Chief Operating Officer John Waldron said on Wednesday.
"Client demand is rising," Waldron said. "We are regulated on what we can do. We continue to evaluate it ... and engage on it."
The bank recently restarted its cryptocurrency trading desk and this month it started dealing bitcoin futures and non-deliverable forwards for clients. https://reut.rs/3lf3KNz
Goldman is also exploring a bitcoin exchange traded fund and has issued a request for information to explore digital asset custody.
Waldron said Goldman can custody digital assets "but can't principle" them, and is in talks with regulators and central banks about how banks should be regulated when dealing with digital money.
The U.S. Securities and Exchange Commission is mulling how to regulate broker-dealers who are holding digital assets for clients and asked for public comments on the matter in December. https://reut.rs/2PScLjS
The pandemic caused an explosion in online commerce, as consumers spent more time shopping from their couch than in-person over the past year.
Goldman believes this trend will continue and that it will cause a corresponding "explosion" in the use of digital currency, Waldron said.
"The pandemic has been a significant accelerant," Waldron said. "There is no question in our mind there will be more digital commerce … and (use of) digital money."
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Goldman Crypto Chief Flags Institutional Demand Driving Boom
By: Bloomberg | March 8, 2021
Goldman Sachs Group Inc. is seeing substantial demand for digital assets from institutions as it works to restart its cryptocurrency trading desk.
In a survey of nearly 300 clients by the firm, 40% currently have exposure to crypto, according to Matt McDermott, global head of digital assets for Goldman Sachs Global Markets Division, speaking on a podcast. The situation is different now compared with the 2017 Bitcoin bubble due to “huge” institutional demand across different industry types and from private banking clients, he said.
McDermott confirmed plans reported last week for Goldman to restart its crypto trading desk, which he said will be “quite narrow initially,” with a focus on areas such as CME Group Inc. futures. He said that U.S. banks need to cope with regulations that bar them from trading physical cryptocurrencies.
Cryptocurrency enthusiasts argue that digital tokens and the underlying blockchain technology are gaining acceptance among more mainstream institutions and investors. The derivatives market and new investment products have made digital assets more easily accessible. Some strategists posit that the asset class is a potential diversifier for portfolios, while others are more skeptical and blame speculators for inflating a possible bubble in Bitcoin and other cryptos.
Bitcoin rose as much as 3.4% on Monday in Asia, while Ether gained as much as 5.3% to the highest since Feb. 23.
Blockchain technology offers “a real diverse set of opportunities for the financial industry and something that there’s a huge amount of momentum” for in the market, McDermott said. “We know firsthand just given the various different projects we’re working on. And we see this as a hugely exciting time exploring the potential of that technology.”
As for prices, 76% of those surveyed see Bitcoin ending 2021 between $40,000 and $100,000, McDermott said. However, 22% expect it to end the year over $100,000.
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Goldman poised to make $200 million profit off Texas deep freeze: Bloomberg News
By: Reuters | March 5, 2021
Traders at Goldman Sachs Group Inc (NYSE:GS) may reap huge profits from the winter storm last month that left many across Texas and other southern U.S. states without electricity, clean water and heat, Bloomberg News reported on Friday.
The Wall Street bank could make up to $200 million from the physical sale of power and natural gas and from financial hedges after spot prices jumped, the report said, citing people familiar with the matter.
Goldman did not immediately respond to a Reuters request for comment.
Bloomberg reported that while the bank could make $200 million on paper, the actual profits collected are likely to be less, as regulators and consumers intervene with legal challenges in the aftermath of the energy crisis and some companies go bankrupt.
Bank of America (NYSE:BAC) also stands to make hundreds of millions of dollars from trades related to Texas's energy market, the Financial Times reported Friday.
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Exclusive: Goldman Sachs restarts cryptocurrency desk amid bitcoin boom
By: Reuters | March 1, 2021
By Anna Irrera, Iain Withers and Lawrence White
LONDON (Reuters) - Goldman Sachs Group Inc (NYSE:GS) has restarted its cryptocurrency trading desk and will begin dealing bitcoin futures and non-deliverable forwards for clients from next week, a person familiar with the matter said.
The team will sit within the U.S. bank's Global Markets division, the person said.
The desk is part of Goldman's activities within the fast-growing digital assets sector, which also includes projects involving blockchain technology and central bank digital currencies, the person said.
As part of this work, the bank is also exploring the potential for a bitcoin exchange traded fund and has issued a request for information to explore digital asset custody, the source said.
The trading desk reboot comes amid growing interest by institutions in bitcoin, which has soared more than 470% over the past year. The largest cryptocurrency is seen by investors and some companies as a hedge against inflation as governments and central banks turn on the stimulus taps.
While its price has risen significantly over the past year, bitcoin remains highly volatile. The virtual currency smashed through $58,000 on February 21 then fell back by as much as 25% but has recovered some lost ground.
This makes the coin and related derivatives attractive for investors willing to take riskier long or short positions as they hunt for yield in a record-low interest rate environment.
Non-deliverable forwards are a type of derivative that allows investors to take a view on bitcoin's future price.
Goldman first set up a cryptocurrency desk in 2018, just as bitcoin's price was falling from record highs, muting investor interest in digital coins.
Since then, market infrastructure for bitcoin and other large cryptocurrencies has significantly matured, with many established financial institutions offering products and services, including CME Group Inc (NASDAQ:CME), Intercontinental Exchange (NYSE:ICE) Inc and Fidelity.
The developments have helped to attract more mainstream companies to the sector, ranging from those offering crypto services to retail or institutional investors, to companies opting to hold bitcoin on their balance sheets
Last month, electric car manufacturer Tesla (NASDAQ:TSLA) Inc said it had bought $1.5 billion worth of bitcoin, while Bank of New York Mellon (NYSE:BK) Corp said it had formed a new unit to help clients hold and transfer digital assets.
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Goldman Sachs-backed ReNew Power to go public via $8-bln SPAC deal
By: Reuters | February 24, 2021
India's largest renewable energy firm ReNew Power on Wednesday agreed to go public through a merger with blank-check firm RMG Acquisition Corporation II, in a deal that values the merged entity at roughly $8 billion.
The deal will be financed with cash proceeds of $1.2 billion, including investments of $855 million from investors including serial blank-check dealmaker Chamath Palihapitiya, funds managed by BlackRock (NYSE:BLK) and Sylebra Capital among others.
Palihapitiya also led the PIPE (private investment in public equity) round at SoftBank-backed Berkshire Grey, which earlier on Wednesday agreed to go public through a merger with a blank-check firm.
Founded in 2011, ReNew Power counts Goldman Sachs (NYSE:GS) and Canada Pension Plan Investment Board (CPPIB) among its prominent investors. It is among a wave of clean-energy firms poised to benefit from India's push into the renewables market.
India, the world's third-largest emitter of greenhouse gases, wants to raise its renewable energy capacity to 500 gigawatts (GW), or 40% of total capacity, by 2030.
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Goldman Sachs Offers Accounts to Retail Investors
By: TheStreet | February 16, 2021
• Goldman Sachs, which traditionally offered money management only to the wealthiest, is offering accounts to retail investors with as little as $1,000.
Investment-banking icon Goldman Sachs (GS) is offering a retail investment service app through its Marcus banking group for accounts as small as $1,000.
The accounts come with an annual fee of 0.35% of assets, or $3.50 per $1,000 of assets.
This is quite a step for the titanic New York financial-services player, which in its heyday of the 1990s and 2000s offered money-management services to only the wealthiest of individuals.
Even then Goldman wasn’t even worried much about individual investors, as money from its trading and investment banking operations rolled in hand over fist.
But the government imposed trading restrictions after the 2008 financial crisis -- in the form of the Dodd-Frank law -- that hemmed in banks’ trading capacity. Investment banking also headed south after the crisis.
To bring in more revenue, Goldman in 2016 began the Marcus retail banking service, named for company Founder Marcus Goldman.
Goldman shares recently traded at $310.12, up 1.2%. The stock has jumped 42% in the past three months amid optimism about the vaccine distribution and economic recovery.
Morningstar analyst Michael Wong puts fair value for Goldman Sachs at only $238. But he likes what the company is doing.
“While Goldman Sachs is showing signs of losing some of the steam that powered revenue and earnings in 2020, it’s showing progress toward its medium-term strategic and financial goals,” he wrote earlier this month.
“The normalization of [fixed income, commodity and currency trading] revenue in 2021 will be a revenue headwind for Goldman Sachs, even though the company’s management remained relatively optimistic with its near-term outlook for other areas, such as equity underwriting and financial advisory.”
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Goldman Sachs unveils Marcus Invest robo-adviser in consumer push
By: Reuters | February 16, 2021
Goldman Sachs Group Inc (NYSE:GS) is launching an automated wealth-management platform to invest customer funds across managed portfolios made up of exchange trade funds for stocks and bonds, the bank said on Tuesday.
Consumers can open an account with Marcus Invest with a minimum of $1,000 and will be charged an annual fee of 0.35%, the bank said.
Goldman's robo-adviser will allocate and rebalance customers' wealth based on models developed by the bank's investment-strategy group, which has traditionally catered to institutions and the ultra-rich.
The move is the latest digital banking push by the Wall Street bank in line with Chief Executive David Solomon's plan to reduce Goldman's reliance on volatile trading and investment banking revenue by shifting focus towards Marcus, its consumer banking unit.
The bank launched Marcus in 2016 to diversify its revenue and funding sources by offering savings accounts and personal loans to retail customers. Goldman has an existing Marcus consumer-banking app.
Marcus Invest offers individual and joint investment accounts, as well as three types of individual retirement accounts, the bank said.
Similar to other robo-advisers the bank will evaluate a customer's risk tolerance and investment timeline and recommend a conservative, moderate or growth portfolio.
Customers will be able to customise their investments by selecting one of three investment strategies including one that tracks market benchmarks while supporting sustainable business practices, the bank said.
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The Goldman Sachs Group, Inc. (NYSE:GS) Expected to Post Quarterly Sales of $10.32 Billion
By: MarketBeat | February 12, 2021
Equities research analysts forecast that The Goldman Sachs Group, Inc. (NYSE:GS) will post $10.32 billion in sales for the current fiscal quarter, according to Zacks Investment Research. Four analysts have provided estimates for The Goldman Sachs Group's earnings. The lowest sales estimate is $10.01 billion and the highest is $10.89 billion. The Goldman Sachs Group posted sales of $8.74 billion during the same quarter last year, which would indicate a positive year-over-year growth rate of 18.1%. The firm is scheduled to report its next quarterly earnings results on Wednesday, April 21st.
According to Zacks, analysts expect that The Goldman Sachs Group will report full year sales of $39.62 billion for the current financial year, with estimates ranging from $38.21 billion to $41.51 billion. For the next fiscal year, analysts forecast that the company will post sales of $40.87 billion, with estimates ranging from $39.66 billion to $42.02 billion. Zacks Investment Research's sales averages are a mean average based on a survey of analysts that cover The Goldman Sachs Group.
The Goldman Sachs Group (NYSE:GS) last announced its quarterly earnings data on Monday, January 18th. The investment management company reported $12.08 earnings per share (EPS) for the quarter, beating the Zacks' consensus estimate of $7.47 by $4.61. The company had revenue of $11.74 billion during the quarter, compared to the consensus estimate of $10.07 billion. The Goldman Sachs Group had a return on equity of 11.23% and a net margin of 16.65%. The firm's revenue was up 17.9% on a year-over-year basis. During the same period in the previous year, the company posted $4.69 EPS.
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The markets goes to heavy manipulation - guess who is leading the Dow's big up day
By: David Larew | February 3, 2021
• The markets goes to heavy manipulation - guess who is leading the Dow's big up day - you guessed it - Da Pusher Man :)
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Goldman Sachs - $40 off the highs - Dang - the pusher man outlook, probably good, if they had insider selling :)
By: David Larew | January 30, 2021
• Goldman Sachs - $40 off the highs - Dang - the pusher man outlook, probably good, if they had insider selling :)
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Goldman CEO Solomon's Pay Cut 36% Due to 1MDB Scandal
By: TheStreet | January 27, 2021
• Goldman's board cut the CEO's pay, viewing 'the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm.'
Goldman Sachs (GS) said Wednesday that Chief Executive David Solomon's total compensation was cut 36% to $17.5 million last year from $27.5 million in 2019, due to the 1MDB scandal.
Chief Operating Officer John Waldron and Chief Financial Officer Stephen Scherr also saw compensation reductions. Waldron’s total dropped to $18.5 million from $24.5 million, and Scherr’s to $15.5 million from $22.5 million.
“These compensation amounts reflect … the findings of the government and regulatory investigations and the magnitude of the firm’s settlement of government and regulatory matters relating to 1Malaysia Development Berhad (1MDB),” Goldman said in a Securities and Exchange Commission filing.
“While none of Messrs. Solomon, Waldron or Scherr was involved in or aware of the firm’s participation in any illicit activity at the time the firm arranged the 1MDB bond transactions, the board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm.”
To be sure, the assessment wasn’t all bad for the executives.
The executives’ compensation also takes into account “the firm’s strong performance in successfully navigating an unexpected and volatile operating backdrop to meet the needs of clients – driving the firm’s highest full-year net revenues in more than a decade … as well as Messrs. Solomon’s, Waldron’s and Scherr’s outstanding individual performance,” the firm said.
Goldman shares recently traded at $276.10, down 2%. They have jumped 40% over the three months through Tuesday as the bank improved its financial performance.
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Goldman Sachs - the pusher man - on a hold short signal as the 10 year treasury yield sinks
By: David Larew | January 26, 2021
Goldman Sachs - the pusher man - on a hold short signal as the 10 year treasury yield sinks - Banks don't like cheaper interest rates...
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Bull Of The Day: Goldman Sachs (GS)
By: Zacks Investment Research | January 21, 2021
Goldman Sachs (GS) is a captain of high finance and the banking sector's knight in shining armor. The firm is known for its quick trading action and best-in-class deal-making investment bank. GS has soared over 50% to all-time highs since Biden was elected President on November 3rd, and I believe this stock has legs to continue running.
The economic downturn and proceeding recovery have been an unexpected tailwind for Goldman, driving the business to record profitability the past 2 quarters, with a robust double-digit topline expansion. Due to Goldman's trading and deal-making profit drivers, the bank didn't see the same margin-pinches from the ultra-low interest rates that commercial banks like JP Morgan (JPM) and Bank of America (BAC) did.
GS is expected to continue pushing growth and profitability as a slew of big deals and market action extends into 2021. Analysts have been increasingly optimistic about GS following its record earnings on Tuesday, pushing its EPS estimates on every time horizon and propelling the stock into a Zacks Rank #1 (Strong Buy).
Recent Earnings
The firm illustrated unbelievable results in the wake of economic uncertainty, taking advantage of new market opportunities. GS reported recorded breaking earnings of $12.08 per share, demonstrating 158% year-over-year growth, and blew Zacks Consensus estimates out of the water by over 72%. Its sales were quite strong as well, showing $11.74 billion, up 18% from the same quarter last year, beating estimates by 22%.
Equity trading and its deal-making investment banking (IB) segment were the two largest growth drivers for this best-in-class investment bank. Goldman's investment banking sector was up 24% in 2020 compared to 2019, and this segment looks like it's just heating up with Q4 IB earnings up 33% from Q3 and 27% year-over-year. Its equities-underwriting portion of IB was booming in 2020 as a record number of businesses hit the public exchanges.
454 companies IPO'ed in 2020, raising over $167 billion, far surpassing the previous record made in 1999 amid the dot-com mania. Goldman was an enormous beneficiary of this push to the public markets. The firm drove over $3.4 billion last year from equity underwriting alone, up 130% from 2019. It looks like this subsegment is only beginning to simmer, with this past quarter generating $1.12 billion, up 195% year-over-year and 30% quarter-over-quarter.
GS's global markets division was its biggest topline driver as the business strategically navigated the choppy market waters and drove this segment's revenue up 43% to a record $21.16 billion, 47% of its total topline in 2020. Equities sales & trading at Goldman appear to be still riding a tailwind as the stock market surges to seemingly no end. This group is up 16% quarter-over-quarter.
What's Next For GS?
David Solomon is proving himself at the helm of this remarkable firm. Since Solomon was named CEO and Chairman of Goldman Sachs on October 1st, 2018, GS shares are up over 28%. This may not sound like a lot, but GS has navigated the 2018 year-end sell-off and the most significant economic contraction in over a decade. GS is sizably outperforming its cohorts JPM and BAC, who have only returned 18% and 8%, respectively. Below is a 1-year price chart of GS (blue) compared to JPM (red) and BAC (green).
Investors & traders pulled profits from all the major banks following earnings over the past week. GS was no expectation as its share price dipped from an all-time high of $309.41 down to the $290 we are trading at today. This has created a tremendous buying opportunity, with 9 out 13 analysts calling GS a strong buy today. The most optimistic price targets are north of $400 a share, representing a 69% upside.
I remain a GS buyer despite the run it has already had. This company is adaptable and resourceful, and no matter what the economy throws at it, GS comes out on top.
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Goldman Sachs Stock Shifts Lower After Earnings
By: Schaeffer's Investment Research | January 19, 2021
• The stock reversed course after Goldman Sachs' CEO warned of some pandemic-related uncertainty ahead
• The firm posted a fourth-quarter earnings and revenue beat
The rumblings of another earnings season are upon us, and bank stocks, as usual, are kicking off the event. On the docket today, for instance, is financial name Goldman Sachs Group Inc (NYSE:GS), which just blew analysts' expectations out of the water with a fourth-quarter earnings beat of $12.08 per share. The company's revenue also topped estimates. Despite the earnings and revenue beat, GS is down 0.7% at $298.91 at last check, reversing course after the company's CEO warned that there is still significant uncertainty, thanks to the growing number of coronavirus cases worldwide.
While the security is falling further from its Jan. 14 record high of $309.41, longer-term, the shares have been in rally mode since familiar support at the $190 mark catapulted GS past its pre-pandemic levels. In the past nine months, GS is up roughly 64%, with guidance from its ascending 10-day moving average.
While the brokerage bunch hasn't chimed in on Goldman Sachs' earnings beat yet, most in coverage came into today optimistic. Of the 13 in coverage, nine call it a "strong buy," while the 12-month consensus price target of $307.81 is a 2.3% premium to Friday's close.
Option traders have shared this sunny sentiment, per Goldman Sachs' 10-day call/put volume ratio of 2.82 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 80% of readings from the past year. This means calls have been picked up at a much quicker-than-usual clip of late.
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Goldman Sachs Will Take Over GM's Credit-Card Business
By: TheStreet | January 16, 2021
• Goldman Sachs will become the issuing bank for General Motors' credit-card programs.
Goldman Sachs (GS) will take over General Motors' (GM) credit-card business, the two companies said Friday.
The New York investment firm will be the issuing bank for the Detroit automaker's credit-card programs, with the start of the program targeted for September. Mastercard (MA) will remain the network for the cards.
“We chose to partner with Goldman Sachs because of their proven ability to innovate,” Chuck Thomson, GM's general manager of retail sales and marketing support, said in a statement.
Terms of the multiyear agreement weren't disclosed.
GM launched its first consumer card in 1992. Since then customers have redeemed earnings toward the purchase of new Chevrolet, Buick, GMC and Cadillac vehicles.
Omer Ismail, Goldman Sachs's global head of consumer business, said the firm's "focus remains on delivering a simple and transparent experience that helps customers manage their spending and borrowing needs better.”
Goldman Sachs has said it hopes to expand its portfolio of consumer loans to $20 billion in the coming years, Bloomberg reported.
As part of those efforts, it’s debuted a credit card with Apple (AAPL) and has begun financing vacation purchases with JetBlue Airways (JBLU).
General Motors has been seeking a cheaper way to fund its auto-loan business. Last month, the carmaker’s finance arm formally submitted its application to the Federal Deposit Insurance Corp. and Utah’s finance regulator to form a so-called industrial loan company
Goldman Sachs shares at last check were down 2.8% at $299.33, while GM was off 2.1% at $50.44. Shares of Mastercard, the Purchase, N.Y., credit-card giant, were off 0.6% at $325.03.
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Goldman CEO David Solomon Expects Employees Back in Office by Year End
By: TheStreet | January 5, 2021
• Solomon spoke with Bloomberg Television about the vaccine rollout and his company's workforce.
Goldman Sachs (GS) CEO David Solomon expects the distribution of the coronavirus vaccine to allow employees of the investment and commercial bank to return to their offices by the end of the year.
"The big focus right now is we’ve got to get people vaccinated -- we’ve got to get to the other side,” Solomon told Bloomberg Television Tuesday. “I certainly would expect a lot of Goldman Sachs employees back in full by the end of the year. We will get through this, and I’m really hopeful that over the course of the next six months we see a real improvement.”
The executive expressed cautious optimism about the vaccine's rollout, despite the U.S. only distributing about a tenth of the 20 million doses so far that President Donald Trump said would be administered by the end of 2020.
“There’s still work to be done. And once we deal with the vaccine and the virus, and people feel safe, we’re still going to have to deal with the economic consequence of the shutdowns and the impact on our economy that this pandemic’s had," Solomon said.
Shares of Goldman Sachs were rising 1.62% to $269.30 on Tuesday.
On Monday, vaccine maker Moderna (MRNA) said it plans to deliver at least 100 million doses of its newly-approved vaccine by the end of March, and boosted the lower end of its year-end target to 600 million.
Moderna, which won Emergency Use Authorization from the U.S. Food & Drug Administration for its mRNA 1273 vaccine in early December, said at least 200 million doses will be available in the U.S. by the end of June, and listed its year-end target for global doses to between 600 million to 1 billion.
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$9.18 Billion in Sales Expected for The Goldman Sachs Group, Inc. (NYSE:GS) This Quarter
By: MarketBeat | December 29, 2020
Analysts expect The Goldman Sachs Group, Inc. (NYSE:GS) to post sales of $9.18 billion for the current fiscal quarter, Zacks Investment Research reports. Four analysts have made estimates for The Goldman Sachs Group's earnings, with the lowest sales estimate coming in at $8.79 billion and the highest estimate coming in at $9.64 billion. The Goldman Sachs Group reported sales of $9.96 billion during the same quarter last year, which would suggest a negative year-over-year growth rate of 7.8%. The business is scheduled to announce its next earnings report before the market opens on Tuesday, January 19th.
According to Zacks, analysts expect that The Goldman Sachs Group will report full year sales of $42.14 billion for the current year, with estimates ranging from $41.61 billion to $42.71 billion. For the next financial year, analysts anticipate that the company will post sales of $38.44 billion, with estimates ranging from $37.59 billion to $39.68 billion. Zacks' sales averages are an average based on a survey of research analysts that cover The Goldman Sachs Group.
The Goldman Sachs Group (NYSE:GS) last issued its quarterly earnings results on Tuesday, October 20th. The investment management company reported $9.68 EPS for the quarter, beating the Thomson Reuters' consensus estimate of $5.57 by $4.11. The Goldman Sachs Group had a net margin of 16.65% and a return on equity of 11.23%. The company had revenue of $10.70 billion during the quarter, compared to analysts' expectations of $9.40 billion. During the same quarter last year, the company posted $4.79 EPS. The firm's revenue was up 28.6% compared to the same quarter last year.
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Analysts Expect The Goldman Sachs Group, Inc. (NYSE:GS) to Post $6.19 EPS
By: MarketBeat | December 27, 2020
Analysts expect that The Goldman Sachs Group, Inc. (NYSE:GS) will report earnings of $6.19 per share for the current fiscal quarter, according to Zacks. Four analysts have provided estimates for The Goldman Sachs Group's earnings, with the highest EPS estimate coming in at $7.37 and the lowest estimate coming in at $4.90. The Goldman Sachs Group posted earnings of $4.69 per share in the same quarter last year, which indicates a positive year over year growth rate of 32%. The firm is expected to announce its next earnings report before the market opens on Tuesday, January 19th.
On average, analysts expect that The Goldman Sachs Group will report full year earnings of $19.26 per share for the current financial year, with EPS estimates ranging from $18.28 to $20.04. For the next year, analysts expect that the company will post earnings of $25.29 per share, with EPS estimates ranging from $23.02 to $27.55. Zacks Investment Research's earnings per share averages are an average based on a survey of research firms that follow The Goldman Sachs Group.
The Goldman Sachs Group (NYSE:GS) last issued its earnings results on Tuesday, October 20th. The investment management company reported $9.68 EPS for the quarter, beating the Zacks' consensus estimate of $5.57 by $4.11. The business had revenue of $10.70 billion during the quarter, compared to analysts' expectations of $9.40 billion. The Goldman Sachs Group had a net margin of 16.65% and a return on equity of 11.23%. The company's quarterly revenue was up 28.6% compared to the same quarter last year. During the same period in the prior year, the business earned $4.79 earnings per share.
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MERRY CHRISTMAS & HAPPY NEW YEAR to ALL!
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Morgan Stanley Boosts The Goldman Sachs Group (NYSE:GS) Price Target to $291.00
By: MarketBeat | December 21, 2020
The Goldman Sachs Group (NYSE:GS) had its target price hoisted by stock analysts at Morgan Stanley from $273.00 to $291.00 in a research note issued to investors on Monday, The Fly reports. The firm currently has an "underweight" rating on the investment management company's stock. Morgan Stanley's price target points to a potential upside of 12.78% from the company's previous close.
A number of other research analysts have also commented on GS. Wells Fargo & Company restated a "buy" rating on shares of The Goldman Sachs Group in a research report on Monday. Zacks Investment Research upgraded shares of The Goldman Sachs Group from a "hold" rating to a "strong-buy" rating and set a $265.00 target price for the company in a research report on Tuesday, December 1st. Credit Suisse Group upped their target price on shares of The Goldman Sachs Group from $262.00 to $325.00 and gave the stock an "outperform" rating in a research report on Friday, December 11th. Barclays upped their target price on shares of The Goldman Sachs Group from $253.00 to $270.00 and gave the stock an "equal weight" rating in a research report on Thursday, October 15th. Finally, UBS Group upgraded shares of The Goldman Sachs Group from a "neutral" rating to a "buy" rating and upped their target price for the stock from $220.00 to $245.00 in a research report on Wednesday, September 23rd. Two analysts have rated the stock with a sell rating, five have assigned a hold rating, fifteen have given a buy rating and one has assigned a strong buy rating to the company's stock. The Goldman Sachs Group currently has a consensus rating of "Buy" and a consensus target price of $258.48.
Shares of NYSE:GS traded up $15.90 during mid-day trading on Monday, reaching $258.03. The company had a trading volume of 94,194 shares, compared to its average volume of 3,613,785. The company has a current ratio of 0.73, a quick ratio of 0.73 and a debt-to-equity ratio of 2.63. The firm has a market cap of $88.78 billion, a price-to-earnings ratio of 10.87, a PEG ratio of 1.12 and a beta of 1.48. The company's 50-day moving average price is $223.82 and its 200-day moving average price is $208.84. The Goldman Sachs Group has a one year low of $130.85 and a one year high of $250.46.
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Goldman Trading Bonus May Jump Nearly 20% After Year’s Windfall
By: Bloomberg | December 17, 2020
Goldman Sachs Group Inc. is planning to boost bonuses for the trading division by up to 20%, people familiar with the matter said, after the business reclaimed its stature as the firm’s golden goose.The fatter paychecks come on the back of a 49% jump in revenue following a sluggish decade for a group that was once the envy of Wall Street. Corners of trading, particularly in fixed income, could expect much bigger payouts as executives try to prevent rainmakers from being lured into the arms of deep-pocketed buy-side firms run by the likes of Ken Griffin, Izzy Englander and Steven Cohen.There will be greater divergence in payouts than in previous years, with some people potentially getting pay cuts despite generating more revenue, the people said, asking not to be identifed becasue bonus policies aren’t made public. Final numbers are still being ironed out and will depend on how well the firm avoids any setbacks in the final weeks.
Goldman’s bonus decisions have been a touchy topic ever since the firm’s success through the 2008 financial crisis drew public attention. But this year, banks all along Wall Street saw staggering gains, giving powerhouses more cover to share spoils. JPMorgan Chase & Co. is boosting bonuses for its sales and trading workers 15% to 20%, people familiar with those talks have said.
A representative for Goldman Sachs declined to comment.
Within the markets division, traders who navigated the wild price moves will pocket much bigger rewards than salespeople who tend client relationships. While many salespeople succeeded in bringing in more business, some of that was by virtue of holding a Goldman business card, one senior executive said.Even still, the trading division will fare better than some insiders feared after a year in which Goldman pledged to cut costs and got slapped with penalties tied to Malaysia’s 1MDB investment-fund scandal. That contributed to more than $3 billion in legal provisions, which have shaved more than 5 percentage points off the bank’s return on equity.Executives have pointed to their relative wins, such as claiming a greater share of business amid the turmoil when clients sought the reassurance of dealing with a large counterpary. Managers insist those gains will persist even after the strains of the pandemic ease, with one executive saying no one will go back to flying a budget carrier after flying a flagship airline.
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Goldman Sachs Reportedly Picked to Lead Coinbase IPO
By: Motley Fool | December 19, 2020
• This strongly suggests the cryptocurrency market operator is leaning toward a traditional issue rather than a direct sale.
One day after cryptocurrency market operator Coinbase announced that it confidentially filed the regulatory paperwork with the Securities and Exchange Commission (SEC) for an initial public offering (IPO), a report indicates that the issue's leading banker will be Goldman Sachs (NYSE:GS).
An article published by Reuters on Friday and citing "a person familiar with the matter" said Goldman had been formally hired to bring the company to market. Presumably, this means that the storied investment bank will lead the syndicate of banks underwriting the deal, although few details were provided.
In a typical IPO, the syndicate is the entity responsible for drumming up interest in the issue, with the aim of increasing demand for the shares being offered (and, oftentimes, the final IPO price).
In July, Reuters reported that Coinbase had begun planning for its debut on the stock market. At the time, though, the company seemed to be leaning more toward a direct listing rather than a traditional IPO involving a syndicate of underwriters.
Coinbase's timing is ideal in several ways. The stock market is frothy, and times of optimism are always good for IPOs, since investors are being asked to put their money in a company as yet untested by the public markets. Cryptocurrencies are also doing extremely well in this era of economic stress; the far and away crypto leader, bitcoin, is trading at all-time highs.
Goldman Sachs hasn't commented on its possible involvement in the Coinbase IPO. Outside of a tersely worded statement published Thursday about its SEC filing, Coinbase has so far provided almost no information about the issue.
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Goldman Sachs plans to flee NYC sign of big trouble
By: New York Post | December 16, 2020
New York’s golden geese are flying south, and not just for the winter.
The analytics firm Unacast reports that more than 3 million have fled the city during the pandemic — replaced by slightly fewer who earn a lot less, for a net reduction in income of some $34 billion. Its estimates, based on cellphone data, may be off a bit, but signs that higher earners have left town are everywhere.
And top businesses are eyeing the exits, too. Deutsche Bank AG is the most recent in a long line of major companies looking to escape the tax-heavy, high-cost city to set up headquarters in friendlier business climates such as Florida and Texas.
The German investment bank is considering moving nearly half of its 4,600 Manhattan staffers to smaller hub cities around the country over the next five years, exploiting the newly discovered convenience of remote work.
Just last week, Goldman Sachs announced it’s looking to move its asset-management arm, which generates $8 billion a year of revenue for the city.
And billionaire Paul Singer is already moving the headquarters of his $41 billion hedge fund Elliott Management from Manhattan to Florida.
These are repeated blows to the tax base. The securities and trading industry accounted for 18 percent of state and 6 percent of city tax receipts last year — while its workers spend to the benefit of other businesses.
The reasoning behind the exodus is obvious. Top earners are already taxed out the wazoo, with lawmakers now looking to add to that burden.
Meanwhile, the pandemic has proven that being in the office isn’t all that important. A greater share of Manhattan office space is fully vacant than any time since right after 9/11, Bloomberg News reports.
If the political class doesn’t rethink its “milk the cash cows” model of governance, the exodus will only grow — and the state and city budget crises deepen.
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Goldman Sachs Mulls Moving Asset Management HQ to Florida: Report
By: TheStreet | December 7, 2020
• The draw of Florida is its lack of an income tax, pleasant lifestyle and lower costs.
Banking titan Goldman Sachs (GS) reportedly is considering moving its asset management headquarters to South Florida from New York City, joining the pilgrimage of investment firms to the Sunshine State.
The news came from knowledgeable sources who spoke to Bloomberg. Goldman is considering the Fort Lauderdale area and Palm Beach County, they said. Dallas is another possibility.
News emerged in October that activist investment firm Elliott Management, led by Paul Singer, is shifting its base to West Palm Beach, Fla. from Manhattan. Stephen Schwarzman’s Blackstone (BX) and Ken Griffin’s Citadel have also boosted their headcount in Florida.
The draw of Florida is its lack of an income tax, pleasant lifestyle and lower costs. The coronavirus pandemic that has decimated the Northeast also is pushing investment firms south.
The departures are obviously bad news for New York City, which depends on financial services for a significant amount of its economic activity.
In response to questions about its plans, a Goldman spokesman told Bloomberg that “we are executing on the strategy of locating more jobs in high-value locations throughout the U.S., but we have no specific plans to announce at this time." Goldman's asset-management unit generates $8 billion in annual revenue, according to the news service.
Goldman shares recently traded at $238.50, down 0.45%. They have risen 4.2% year to date -- soaring 27% since Oct. 30 -- as the company seeks to reboot under its latest CEO David Solomon.
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Jim Cramer: Keep an Eye on Goldman Sachs
By: TheStreet | December 4, 2020
• Jim Cramer shares insights about buying Dollar and Goldman Sachs, and evaluating President-elect Joe Biden’s economic team.
Goldman Sachs Stock: Buy or Sell?
Last month, it was announced that Goldman Sachs’ (GS) - Get Report co-head of investment banking Gregg Lemkau is leaving the firm, several media outlets reported.
He was considered a contender to eventually become chief executive at the storied investment bank but instead is joining Michael Dell’s investment firm, MSD Capital, knowledgeable sources told The Wall Street Journal.
The firm manages the assets of Dell, who founded Dell Computer, and his family.
Goldman posted relatively weak performances from the end of the financial crisis almost until October 2018, when David Solomon took over as CEO.
Cramer is expecting that evictions will happen as people may start to get rid of tenants who can’t pay rent. He thinks that there are landlords who are stressed to the limit with the banks.
He added that if investors are considering owning a bank stock, then they should consider Goldman Sachs because they don’t have that eviction risk.
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Goldman Sachs - the pusher man - so you "Knew" who was going to win...
By: David Larew | November 29, 2020
Goldman Sachs - the pusher man - so you "Knew" who was going to win... The question after watching "The Big Short" is when did you know it and how did you know about what was in place to win the election.
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Goldman Sachs Raises $10.3 Billion to Acquire Buyout Stakes
By: Bloomberg | November 18, 2020
(Bloomberg) -- Goldman Sachs Group Inc. raised $10.3 billion for a new fund that will primarily buy private equity stakes as interest in such deals intensifies.
Harold Hope, Goldman’s global head of secondary investing, said the fund is his group’s largest and includes about $250 million of internal capital. It will be used to acquire holdings owned by existing fund backers and stakes that buyout firms may want to spin off into new vehicles, an area that Hope calls “non-traditional” deals.
“We’re allowing existing private equity managers to have another go around at that asset, and not have to sell it to someone else before they are ready,” Hope, who joined Goldman Sachs in 1999, said in an interview.
Wall Street firms are building secondaries businesses as investors seek liquidity and to mitigate the risk of traditional buyout funds. Brookfield Asset Management Inc. and TPG are among firms pushing into the market with such transactions gaining traction even as deal volume has slid in the pandemic. There were a record $85 billion in secondaries deals last year, according to research from Coller Capital.
In secondaries, firms buy portfolios of funds from investors who need cash or want to rebalance their holdings. Private equity managers also turn to the market to hold onto a company while providing an exit for investors.
Goldman’s new fund is the firm’s eighth in this business. It’s 43% larger than the $7.2 billion pool raised in 2016. The firm has committed almost $40 billion in its secondaries strategies since the group’s founding.
The New York-based firm invests across fund strategies, including buyout, growth, venture and infrastructure. It will mostly target funds focused on the U.S. and Europe, with the remainder in emerging markets and parts of Asia. As much as 10% of the fund will focus on real estate, according to Hope.
In the second quarter, Goldman’s secondaries group took advantage of dislocations spurred by the Covid-19 crisis to invest $900 million of capital from the fund, up 40% from the year-earlier period, Hope said. The firm has been buying defensive assets such as technology, infrastructure and health care companies -- sectors that have bounced back, showing their stability, he said.
The fund is about 20% invested into deals. In November, Goldman, which started its secondaries business in 1998, led investors in a transaction that enabled Clearlake Capital to shift Ivanti, a provider of IT management and security software solutions, into a new separate fund. The firm led a similar deal in July that let Riverstone Holdings LLC move renewable energy firm Enviva Holdings into a new vehicle.
Hope said he expects more players to do more transactions.
“The reason you’re seeing larger and larger funds is really because the secondary market has grown so quickly and it’s so concentrated among a number of established buyers,” Hope said. Given the deal volume, “the selling opportunity is greater than the capital there is to buy it.”
(Updates sixth paragraph with details on Goldman’s backing of secondaries. An earlier version of the story corrected the spelling of a company name in the ninth paragraph.)
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Goldman Sachs (GS) Stock Ticks Higher After Another Layoff Announcement
By: Schaeffer's Investment Research | November 18, 2020
• Goldman Sachs already cut 400 jobs in September
• The security is eyeing its highest close in roughly eight months
Financial name Goldman Sachs Group Inc (NYSE:GS) is climbing higher this morning, last seen up 1% at $226.90, following news the company would lay off an undisclosed number of workers in an effort to reduce operating expenses by $1.3 million over the next three years. This marks Goldman Sachs' second round of layoffs this year, though the company does not expect this round to exceed the 400 positions cut in September.
Earlier this month, the security just enjoyed an impressive bull gap above recent pressure at its 120-day moving average, thanks to an upbeat vaccine update from Pfizer (PFE) that gave bank stocks a boost. Now, GS is eyeing its highest close in roughly eight months -- poised to topple the $225 level for the first time since early February.
Analysts are mostly bullish on the security. Of the 14 in coverage, 10 call it a "strong buy." Plus, the 12-month consensus price target of $255.58 is a 12.6% premium to current levels.
Meanwhile, calls are outnumbering puts on an overall basis, though there's been an uptick in bearish options activity of late. This is per Goldman Sachs' 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the past year.
Now looks like an ideal time to get in on Goldman Sachs stock's next move with options, though. The equity's Schaeffer's Volatility Index (SVI) of 27% ranks in the 8th percentile of its 12-month range, meaning options traders are pricing in relatively low volatility expectations at the moment.
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Goldman Admits Role in Record $1.6 Billion 1MDB Bribe Spree
By: Sridhar Natarajan, Tom Schoenberg, Greg Farrell | October 26, 2020
Goldman Sachs Group Inc. admitted its role in the biggest foreign bribery case in U.S. enforcement history, reaching multiple international settlements to end probes into its fundraising for the scandal-plagued Malaysian fund known as 1MDB.
Goldman officials helped spread $1.6 billion in illicit payments across Malaysia and the Middle East as part of a scheme that diverted money raised for development projects into an international spending spree on mansions and lavish parties, the bank said.
The bank will pay billions of dollars in new penalties to the Justice Department and other U.S. authorities, as well as to regulators in the U.K., Hong Kong and Singapore. The payments brought its overall tab to more than $5 billion to resolve probes into bond deals it arranged for 1MDB.
Goldman agreed to the Justice Department’s findings that some executives in Asia and internationally participated in bribery or were aware of it. The Wall Street giant will cut the pay of Chief Executive Officer David Solomon and other current leaders and claw back compensation from his predecessor Lloyd Blankfein and several other former executives, the bank said Thursday.
A small Malaysian unit of the U.S. bank pleaded guilty to a single conspiracy charge on Thursday, the first guilty plea ever entered by Goldman. But the parent company avoided a criminal conviction to resolve the investigations, as part a deal that allows the bank to put off any prosecution as long as it cooperates with ongoing U.S. investigations and submits compliance reports.
The deferred-prosecution agreement is a win for Goldman Sachs, because a conviction might have risked losing some institutional clients that are restricted from working with financial firms with criminal records. The bank’s shares rose 1.2% on Thursday.
The global resolutions announced Thursday conclude more than a half decade of investigations into Goldman’s role in raising $6.5 billion for 1MDB in three bond offerings. To smooth the way for those bond deals, Goldman officials conspired with a 1MDB official to bribe Malaysian officials and officials of a sovereign wealth vehicle in Abu Dhabi, the U.S. Justice Department said.
U.S. authorities said that Goldman’s misconduct rose to the bank’s highest ranks, despite its insistence for years that rogue employees were responsible. “The scheme was principally carried out by senior officials in Goldman,” Acting U.S. Attorney Seth DuCharme said.
In all, some $2.7 billion of the money raised for 1MDB was stolen by people connected to the country’s former prime minister and diverted for bribes, a luxury yacht, fine art and even funding for the Hollywood movie “The Wolf of Wall Street.”
The Justice Department settlement concludes one of the biggest bank probes inherited by the Trump administration. The bank will pay more than $2.3 billion in the plea deal, U.S. prosecutor Alixandra Smith said, the largest penalty in U.S. history for a violation of the Foreign Corrupt Practices Act. Airbus SE paid $2.09 billion earlier this year to settle global bribery probes.
The case against the Wall Street firm focused on its fundraising work in 2012 and 2013 for the state-owned 1MDB, formally known as 1Malaysia Development Bhd. From about 2009 to 2014, the bank’s Malaysia unit “knowingly and willfully agreed to violate the Foreign Corrupt Practices Act by corruptly promising, and paying bribes to foreign officials in order to obtain and retain business for Goldman Sachs,” the bank’s general counsel, Karen Seymour, told U.S. District Judge Margo Brodie in Brooklyn in a video hearing on Thursday.
Goldman’s investment-banking group, led at the time by Solomon, collected $600 million from the bond sales.
Prosecutors in court filings described a corporate culture at Goldman that displayed a casual indifference to bribery, at least among a few senior executives.
In a statement of facts accepted by Goldman, prosecutors highlighted a call in which a partner at the bank discussed with a senior executive problems the bank was having in securing an investment from an Abu Dhabi investment fund related to 1MDB.
The partner said it was clear that a government official in Abu Dhabi was “trying to get something on the side in his pocket” from the deal. “I think it’s quite disturbing to have come across this piece of information,” he added.
“What’s disturbing about that?” the senior executive replied, according to the filing, which didn’t identify the individuals. “It’s nothing new, is it?”
The suspected mastermind of the 1MDB fraud, a Malaysian financier known as Jho Low, conspired with bankers Tim Leissner, Roger Ng and others to bribe high-ranking officials in Abu Dhabi’s state-owned and state-controlled sovereign wealth fund, International Petroleum Investment Company, and a unit, Aabar Investments PJS, the bank admitted. IPIC agreed to be a guarantor of a 2012 1MDB debt deal, a role that helped the bond offering move ahead.
Bribes also went to the Malaysian government and 1MDB officials, prosecutors said.
At a February 2012 meeting, Low explained to Leissner, Ng and others that “government officials from Abu Dhabi and Malaysia needed to be bribed to both obtain the guarantee from IPIC and get the necessary approvals from Malaysia and 1MDB,” they said.
Earlier this week IPIC withdrew a lawsuit in New York alleging that Goldman conspired with Malaysians to bribe senior executives to further their goals of looting 1MDB.
“Following collaborative discussions, the International Petroleum Investment Company is dismissing its lawsuit against Goldman Sachs, related to issues regarding 1MDB,” a spokesman for IPIC, now part of Abu Dhabi’s Mubadala Investment Co., said in a statement.
Goldman’s compliance employees were on notice to keep an eye out for any transactions that might involve Low, who was considered a significant risk. Yet in the 1MDB bond deals, they didn’t take “reasonable steps” to keep him out of it, according to the statement of facts.
For example, Goldman failed to review electronic communications of members of the deal team for evidence of Low’s involvement, which by 2012 would’ve shown Low’s role in the matter, the statement says.
Low, who has professed his innocence, remains at large. Leissner, who was the bank’s southeast Asia chairman, pleaded guilty in the U.S. to conspiring to launder money. He’ll be sentenced in January. Ng was charged with conspiring with Low to launder money. He has denied wrongdoing.
“The board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm,” Goldman’s board said in a statement Thursday announcing the executive pay cuts.
The Justice Department penalty against Goldman credits more than $1 billion in fines paid to other U.S. agencies and foreign authorities. That includes $400 million to the Securities and Exchange Commission, $150 million to New York’s Department of Financial Services and $154 million to the Federal Reserve. After disgorgements of Malaysia profits, the Justice Department places the total U.S. penalty at roughly $2.9 billion.
Goldman Sachs units will also pay $350 million to Hong Kong’s financial regulator, $122 million to Singapore’s government and 96.6 million pounds ($126 million) to the U.K.’s Financial Conduct Authority, those bodies announced Thursday.
Goldman reached a settlement in July with Malaysia, which included a payment of $2.5 billion and an unusual provision that the bank would guarantee that the Asian nation would recoup an additional $1.4 billion from 1MDB assets seized around the world. Malaysia dropped criminal charges against the bank as part of that deal.
Goldman will seek U.S. Labor Department permission before the Malaysia unit’s December sentencing to continue handling retirement funds for Americans, its lawyers said. Banks must secure a waiver from the department to continue handling such funds after an admission of criminal conduct.
The 1MDB saga devolved into a plot to pressure the U.S. to go easy on some of the alleged looters, casting a wider web that has embroiled a prominent Republican fundraiser, an official in the Justice Department and even a former Fugees rap star.
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Goldman Agrees to Pay $2.9 Billion to Settle 1MDB Case
By: TheStreet | October 22, 2020
• Goldman "accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials" and will pay $2.9 billion, the Justice Department said.
The Justice Department said Thursday that banking titan Goldman Sachs (GS) agreed to pay more than $2.9 billion to settle charges related to the 1MDB scandal.
“Goldman Sachs today accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials to obtain lucrative underwriting and other business relating to 1MDB,” Acting Assistant Attorney General Brian Rabbitt said in a statement.
The agreement, “which requires Goldman Sachs to admit wrongdoing and pay nearly $3 billion in penalties, fines, and disgorgement, holds the bank accountable for this criminal scheme.”
Goldman was in hot water for its role in raising $6.5 billion in three bond sales between 2012 and 2013 for the 1Malaysia Development Berhad, or 1MDB, state fund.
The fund raised the money for investment projects and joint ventures. But Malaysian and U.S. officials say $4.5 billion, including some of the money Goldman helped raise, was stolen from 1MDB. Goldman was accused of helping the Malaysian financier Low Taek Jho steal the money.
In July, Goldman agreed to pay $3.9 billion to settle Malaysia’s criminal probe, Reuters reported. And Low has denied wrongdoing, the news service reported.
Goldman shares recently traded at $204.51, up 0.8%. They have slumped 13% year to date.
On Tuesday, amid reports that a settlement of more than $2 billion was coming, Morningstar analyst Michael Wong wrote, “A $2 billion charge is equivalent to about $5.60 per share. This charge is manageable given that Goldman Sachs’ market capitalization is around $70 billion and that it reported net income to common shareholders of $3.48 billion, or $9.68 per diluted share, for the third quarter of 2020.”
Any future fines are likely to be smaller, he said, putting the fair value of Goldman shares at $239.
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Goldman Sachs Reportedly to Name Less Than 60 New Partners in 2020
By: TheStreet | October 6, 2020
• A report says Goldman Sachs will name fewer new partners this year than any time since the investment bank went public in 1999.
A report said Goldman Sachs Group (GS) will name fewer new partners this year than any time since the investment bank went public in 1999.
Goldman shares recently traded at $205.37, up 1.77%, and have slumped 10% year to date. The stock has risen 10% since Sept. 23.
After earning the reputation as perhaps the strongest financial institution in the nation, Goldman has stumbled since the financial crisis of 2008. It has been done in by a difficult environment for banks and by its own missteps.
As for Goldman’s new partners, the number may slide below 60 this year from 84 in 2016, a source told Bloomberg.
Goldman plans to trim about 1% of its employees, or about 400 jobs, sources told Bloomberg last week.
Morningstar analyst Michael Wong has a positive view of Goldman Sachs beyond the immediate future.
“Given our forecast, we assess that Goldman Sachs should trade at or higher than book value,” he wrote in an August commentary.
“While the market is unlikely to give the company much credit for its new initiatives in the near term, we believe the company has already shown positive changes in its business mix and that the market will eventually value the company much higher than it had been over the previous several years.”
Wong likes Goldman Sachs’ investment management unit. “Investment management is a relatively stable, high-return-on-capital business that is well suited to the current regulatory environment,” he said.
Wong puts fair value at $239 for shares of Goldman Sachs.
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Goldman Shares Rise After UBS Upgrade Amid 'Solid Results'
By: TheStreet | September 24, 2020
• “Goldman is generating solid results in the current environment," says UBS analyst Brennan Hawken, who upgraded the investment bank to buy.
Goldman Sachs (GS) shares rose on Thursday after UBS analyst Brennan Hawken upgraded the investment bank to buy from neutral and raised his share-price target to $245 from $220.
“Goldman is generating solid results in the current environment, which has sustained in the third quarter, and potential volatility from the upcoming U.S. election could allow for a solid fourth quarter, bridging investors to first-quarter seasonal strength,” Hawken wrote in a commentary.
Shares of the New York bank recently traded at $187.54, up 0.8%. The stock had fallen 19% this year through Wednesday.
The minuscule interest rates implemented by the Federal Reserve in response to the coronavirus pandemic have taken their toll on the entire banking industry.
Still, “M&A announcements are beginning to pick up, underwriting results have been very robust, and trading volume and investor engagement has remained elevated, which plays to Goldman's traditional strengths,” Hawken said.
“As some of these revenues recover (while trading normalizes), Goldman's efficiency efforts should limit expense growth, driving up [return on tangible equity].. … We see a path to 12%-plus ROTE, yet GS is trading below [tangible book value].”
Next year, “we expect the efficiency efforts from GS's strategic plans to begin to impact the profit and loss, driving down the efficiency ratio, leading to upside to earnings forecasts,” Hawken said.
Currently, 18 Wall Street analysts have buy ratings on Goldman and 8 have hold ratings, according to Bloomberg.
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Don’t Overlook The Vampire Squid’s Role In The Recent Tesla Call Buying Frenzy
By: Jesse Felder | September 23, 2020
“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” -J. Paul Getty
It’s hard to believe that it was over a decade ago that Matt Taibbi published his famous Great Financial Crisis post-mortem for Rolling Stone centered around the role played by Goldman Sachs. It opened, “The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” I would say that there is plenty of evidence that this still holds true today.
Over the past couple of months, I’ve tried to chronicle here the speculative feeding frenzy in the options market that has seen volatility indexes surge along with stock prices and helped to power markets higher in the face of the worst economic decline in modern times. And, in the process of looking for clues, Goldman’s name has come up at every turn.
Tesla, a Goldman client, has been the focus of much of the call buying that has driven these trends. At its recent high, the stock had risen 800% from its March low even as revenue fell 5% in its most recent quarter so it’s clearly not fundamentals driving the share price. No, as many have now demonstrated (most notably Luke Kawa back in February), massive call buying acts as a sort of manifest destiny that creates the higher stock prices call buyers envision. This happens by way of the options dealers who are forced to buy the underlying shares as a hedge against they calls they sold.
Anyhow, it turns out that Goldman recently profited $100 million from its own buying of call options on Tesla shares. Clearly, they understand how this game is played and couldn’t resist getting in on the action. However, it also turns out that Goldman (along with Morgan Stanley) was the lead underwriter on Tesla’s February stock offering. As such, it was entitled to buy hundreds of thousands of shares back then before the latest surge in price. Shortly thereafter the firm saw fit to put a buy rating on the shares that kicked off its glorious rally over the past several months.
It also turns out that Goldman (and Morgan) a while back also lent Elon Musk several hundred million dollars against his holdings of Tesla stock. In addition, they have also lent SolarCity, a troubled Tesla subsidiary, nearly $2 billion directly.
So Goldman has a keen interest in seeing Tesla shares rise for several reasons. First, so that they can profit directly from their own equity and derivates stakes. Second, so that the company is inspired to issue more equity, generating investment banking revenue (and offering more opportunities for equity purchases). And third, because rising equity prices make Elon a better credit risk and, more importantly, equity raises at inflated valuations make Tesla (and SolarCity) a better credit risk.
Now come back to Goldman’s recently revealed options profits in Tesla’s stock. Could the company have any greater incentive to try to manipulate Tesla shares higher by way of the options market? Now consider that Goldman also has a very cozy relationship with Softbank, another investment banking client for which it also acts as creditor. Softbank, after running into trouble created by its disastrous investment in WeWork (to which Goldman lent $1.75 billion), recently revealed that it miraculously profited to the tune of hundreds of millions, if not billions, of dollars on equity investments and call options on popular tech shares including Tesla.
Of course, I have no evidence to actually prove anything but it certainly looks to me like Goldman has found a way to prevent what could have become very real “problems” for the bank, in the J. Paul Getty sense, by way of the market for equity derivatives. Either that or it was just a very fortunate turn of events marked by a number of strange coincidences. Personally, I don’t believe in coincidences.
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Fed states anxiety test error impacted goldman and morgan stanley
By: INVESTOR NEWS | September 4, 2020
A computational mistake because of the federal reserve within many years bank stress tests lead to a little filled money demands for two us banks, goldman sachs and morgan stanley.
The main lender admitted the blunder on friday. it stated goldman sachs common equity level one (cet1) necessity has been modified to 13.6 %, from 13.7 percent previously. at morgan stanley, the limit had been relocated to 13.2 per cent from 13.4 %.
The fed stated losing prices on specific general public welfare assets produced in funds or businesses that purchase reduced- and moderate-income communities, in places such as for instance housing or neighborhood development had been in the beginning miscalculated, which led to an overestimation of hypothetical losses for people investments.
Equivalent mistake impacted citigroup, wells fargo, and hsbc the united states, but did not end up in an alteration those finance companies capital needs.
Goldman sachs stated it absolutely was notified because of the federal reserve of an error inside their calculation of our anxiety money buffer (scb). correctly, our scb has already been revised downward to 6.6 per cent, with corresponding modification downward inside our required cet1 proportion to 13.6 per cent.
The scb is a money standard tailored every single financial institutions exposure, built to make sure that they've sufficient cushion regarding a-sharp downturn in the economy or marketplace turbulence. it had been sent applications for the 1st time in 2010.
Goldman was the only lender to own a money shortfall after this years tension examinations had been introduced in summer. it had a cet1 ratio of 12.5 percent at the end of initial quarter, meaning it had $12.50 in top-notch capital for each $100 of risk-weighted possessions.
The bank said it may increase capital levels without altering its method. by june, the lender had raised its cet1 capital amount to 13.6 %, rendering it certified with the corrected standard.
Goldman appealed the outcomes of tension tests, one of five banks to do this. a person knowledgeable about the attraction stated the lending company thought its strong second-quarter trading results revealed its trading operations were countercyclical. its attraction was denied.
Morgan stanley didn't instantly comment.
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$GS | Its Time For #Goldman To Shine! #GoldmanSachs
Potential change of sentiment and momentum may be coming
into the market which may see some HIOT money
looking for a safer home.
Indicators bullish and in reversal.
Volume increasing.
Golden Cross imminent
GS may be setting up a break from the current correction.
Potential Targets as per chart
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