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Message
Is there a chance that Goldman is done?
Posted on 5/19/10 at 11:49 am
Posted on 5/19/10 at 11:49 am
I saw this article yesterday:
LINK
It got me thinking about the topic. I'm at the SALT conference here in Vegas, and when I arrived last night, I had drinks with a hedge fund insider type guy friend of mine who is absolutely convinced that they are toast. He is aware of extraordinarily damning emails that 100% confirm the very worst of what has been alleged by congress, and thus he thinks they've gone from Obama darling to potential terminal target.
I don't totally buy it, but seems like maybe there's writing on the wall. Thoughts?
quote:
On this day in 2009, Goldman Sachs closed at $141.85 per share, adjusted for dividends; since then, it’s announced $24 per share in earnings. It’s now trading at $137. Somehow, the bank has managed to lose value over the past 12 months, even as the S&P 500 has risen by 25%. Here’s a chart showing the relative one-year performance of Goldman (blue) and Bank of America (green) against the S&P 500 (red), up to yesterday’s close: it doesn’t even include today’s 4% drop in Goldman’s share price.
quote:
Goldman is now trading at less than a 7% premium to its book value last quarter of $128.33 per share — and remember that given how profitable it is, that book value is surely rising by the day. Its p/e ratio is floating around 6, which is hilariously low for a company making this much money. And looking at the chart, the fate of Goldman’s stock has nothing to do with being too big to fail — anybody who would stop Goldman from growing would do the same to BofA.
LINK
It got me thinking about the topic. I'm at the SALT conference here in Vegas, and when I arrived last night, I had drinks with a hedge fund insider type guy friend of mine who is absolutely convinced that they are toast. He is aware of extraordinarily damning emails that 100% confirm the very worst of what has been alleged by congress, and thus he thinks they've gone from Obama darling to potential terminal target.
I don't totally buy it, but seems like maybe there's writing on the wall. Thoughts?
6
Posted on 5/19/10 at 12:03 pm to Tiger JJ
I could see the administration making an example of them to prove that they are a friend to the common man (which is of course a great description of the average Goldman client). I have no problem with a firm like Goldman making tons of money by simply being better than everyone else, kicking arse, and being assholes about it. But some of the shite they've been accused of, if true, should result in them getting bent over and put out of business, with their management barred from all forms of the investment business. It's always nice to see justice served. Too bad it's increasingly rare.
Posted on 5/19/10 at 12:09 pm to Tiger JJ
I had drinks with a hedge fund insider type guy friend of mine who is absolutely convinced that they are toast. He is aware of extraordinarily damning emails that 100% confirm the very worst of what has been alleged by congress
If he's right, that would be awfully valuable information.
I don't buy it, either.
If he's right, that would be awfully valuable information.
I don't buy it, either.
Posted on 5/19/10 at 12:12 pm to Dr Rosenrosen
quote:
I had drinks with a hedge fund insider type guy friend of mine who is absolutely convinced that they are toast. He is aware of extraordinarily damning emails that 100% confirm the very worst of what has been alleged by congress
If he's right, that would be awfully valuable information.
I don't buy it, either.
Oh, I'm 100% certain about the email aspect (can't go into why). I meant I don't buy the idea of Goldman actually going under.
Posted on 5/19/10 at 12:19 pm to Tiger JJ
quote:Then some of them likely perjured themselves during Congressional Testimony. I wonder how he got the information.
He is aware of extraordinarily damning emails that 100% confirm the very worst
Posted on 5/19/10 at 12:24 pm to Tiger JJ
quote:How many drinks did he have before he told you that?
I had drinks with a hedge fund insider type guy friend of mine
Posted on 5/19/10 at 12:30 pm to LSURussian
Actually zero. It was very annoying.
Posted on 5/19/10 at 12:34 pm to Tiger JJ
I don't buy a) that he really knows or b) that GS is going under.
But then again, maybe we should all be buying GS puts if he's right.
But then again, maybe we should all be buying GS puts if he's right.
Posted on 5/19/10 at 12:39 pm to Dr Rosenrosen
quote:
I don't buy a) that he really knows or b) that GS is going under.
The emails are beyond question. But clearly he has no idea of the ultimate impact.
Posted on 5/19/10 at 12:41 pm to Dr Rosenrosen
quote:
But then again, maybe we should all be buying GS puts if he's right.
So long as you don't buy them from GS.
Posted on 5/19/10 at 3:34 pm to Tiger JJ
This post was edited on 5/20/10 at 12:13 am
Posted on 5/19/10 at 4:40 pm to Tiger JJ
How are we defining done? Court-ruling/bad press leads to the firm breaking up, or court-ruling/bad press drives the firm into the red and they blow up? I can see the former happening, maybe, the latter is something prplhze would suggest. Its hard for me to see it happening in either case, its a nearly $1 Trillion dollar entity, which makes it hard for me to see it happening. I would lean towards Blankfein/Viniar/other officers/directors being forced out as the consequences.
Posted on 5/19/10 at 5:01 pm to kfizzle85
The total amount of ABS CDO losses (not defaults...LOSSES) that were foisted onto Goldman clients is several multiples of current book value of the firm. You get this thing in front of a jury and you never know what might happen.
Posted on 5/19/10 at 5:10 pm to Tiger JJ
Assuming the prosecution can prove intent, which is I guess what you are suggesting with the email angle. I'm not saying they don't "deserve" it or whatever, I just have a hard time believing the powers-that-be would let that happen after everything that's gone on. Just my feeling, and a purely subjective viewpoint. Even in the event of a truly mammoth penalty, I would think they would have a rolling mass exodus of personnel as the situation became clear, lending itself to Outcome #1 in my other post.
Posted on 5/19/10 at 5:18 pm to kfizzle85
Yeah I mostly agree. I think expected minimum case is probably a significant brain drain from the firm.
Posted on 5/19/10 at 5:27 pm to Tiger JJ
It'll be like ATT. A bunch of groups will break out on their own, then the new firms will slowly re-merge back together over the course of the next millennium or so. 
Posted on 5/19/10 at 5:27 pm to Tiger JJ
i havne't been reading much latelly, can someone highlight a few of the bad things they have been accused of ?
Posted on 5/19/10 at 7:15 pm to kfizzle85
quote:
It'll be like the Terminator. A bunch of pieces will break out on their own, then slowly re-merge back together over the course of the next decade or so.
FIFY
Posted on 5/19/10 at 8:50 pm to Zilla
quote:
i havne't been reading much latelly, can someone highlight a few of the bad things they have been accused of ?
The primary one is selling clients tens of billions of dollars of securities that they intentionally built to be crappy so they could take the other side and profit off of.
Posted on 5/19/10 at 10:16 pm to Tiger JJ
yikes, thanks ... so are they facing losses or lawsuits ? what exactly could put them under if it were to happen ?
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