QUOTE AND NEWS
MarketWatch  Mar 2  Comment 
Jim Katzman, head of the firm’s West Coast M&A practice, is also leaving at the end of the month.
The Economic Times  Mar 1  Comment 
"If the share of states were to be smaller, then the Central fiscal deficit would have been correspondingly lower. So, the 3.9% fiscal deficit target should be seen in that light."
Clusterstock  Feb 27  Comment 
When former Goldman Sachs co-chair John Whitehead passed away earlier this month, he left a huge legacy at the company. But one of his lesser-known contributions was the set of rules he wrote for his fledgling "new business," or sales,...
Clusterstock  Feb 27  Comment 
Goldman Sachs has put together a tremendous infographic showing how millennials–those born between 1980 and 2000–are going to impact and shape the economy in a profound way as they move into their "prime spending years."  Because of factors...
HedgeFundBlogger.com by Richard Wilson  Feb 26  Comment 
Stakes in Credit, Real Estate, Private Equity and Hedge Funds Return $10B to Goldman Sachs Goldman Sachs, an American multinational investment banking firm, is pleased to announce that stakes in credit, real estate, private equity and hedge...
Clusterstock  Feb 26  Comment 
Goldman Sachs employees are finally getting their 2008 payout. Last year the firm's employees cashed in on stock options totaling $2.03 billion, Bloomberg reported. The options served as incentive to keep top people on board after the...
Jutia Group  Feb 26  Comment 
[Reuters - UK Focus] - Philip Shelley, co-head of UK corporate broking at Goldman Sachs Group Inc is set to join Barclays, people familiar with the matter told Reuters. Shelley, who joined Goldman Sachs from UBS four years ago, ... Read more on...
The Australian  Feb 25  Comment 
GOLDMAN Sachs chief David Solomon says currency wars and commodity price volatility won’t dampen enthusiasm for cross-border mergers and acquisitions.
Jutia Group  Feb 24  Comment 
[ETF Trends] - Goldman Sachs (NYSE: GS), the largest U.S. investment bank, is inching closer to becoming a player in the exchange traded funds arena after the Securities and Exchange Commission granted the company permission ... Read more on this....
Forbes  Feb 24  Comment 
Looking at the universe of stocks we cover at Dividend Channel, on 2/26/15, Columbia Property Trust Inc (NYSE: CXP), Allstate Corp. (NYSE: ALL), and Goldman Sachs Group Incorporated (NYSE: GS) will all trade ex-dividend for their respective...




 

Goldman Sachs (NYSE: GS) is a U.S. bank holding company known for a strong investment bank division. Goldman Sachs advises corporations on mergers and acquisitions, offers trading services, and manages the assets of large institutions, governments, and wealthy individuals. Goldman Sachs also uses its own capital to engage in long-term (private equity) and short-term investments (propriety trading). For the fiscal year 2010, Goldman Sachs reported a total revenue of $39B[1] and a net income of $8.35B[2].

The passage of new regulation from the US government could have a large impact on Goldman Sachs' operations. In particular, its use of Proprietary trading, its investments and hedge and private equity funds, as well as fees from the Federal Reserve could force the company to alter its operations.

History and Business Overview

GS has frequently performed above the market despite worsening economic conditions. For the fiscal year 2010 ended in December, Goldman Sachs reported a total revenue of $39B[1] and a net income $8.35B.[2]


The company's operations can be broken down into four divisions:

Institutional Client Services (56% of revenue in 2010)[1]

This division facilitates trades on behalf of clients and invests Goldman's own capital using various debt and equity instruments. There are three subdivisions in the Trading & Principal Investments segment:

  • Fixed Income, Currency, & Commodities facilitates trades of asset-backed securities, securitized loans, currencies, and commodities (ex: oil, corn, or chocolate futures). It seeks opportunities to profit through the movements of interest rates and credit products.
  • Equities specializes in facilitating equity trades, and is considered to be a leader in electronic equities trading. Electronic trading is efficient because it eliminates the need people physically executing trades on stock exchange floors, and carries significantly smaller commissions than traditional trading. This segment is also heavily involved in proprietary trading and derivatives. [3]
  • Commissions and Fees makes money by conducting transactions on stocks, options, and futures on behalf of institutional clients.
  • Securities Services earns fees by providing financing, lending, as well as clearing and settlement of securities for clients.

Lol, sorry, again I was vague.It was directed at you mg.I asked beaucse your holdings listed on your sidebar for your non-reg portfolio all seem like they yield well except WAG. But IIRC, they just increased about 20%.Just curious as to others methodologies.Sometimes I get hung up on a company, Petro Canada is one, that the yield is less than 2% so I hold off. For some reason I get hung up around 2%.

Investing & Lending (19% of revenue in 2010)[1]

This segment are generally long term investments and loans to large organizations. This portfolio consist of privately negotiated transactions such as acquisitions, equity and debt securities, buyouts and investments in external funds.

Investment Management (13% of revenue in 2010)[1]

Goldman's investment management division manages assets for large institutional investors such as pension plans, endowments, and trusts. This includes providing a range of investment strategies and advice to these organizations.


News Updates

The reputation in the public eye of Goldman Sachs has suffered considerably in recent years. In April 2011, the Senate Permanent Subcommittee published a report on the financial crisis concluding that the company had not been totally forthright in explaining to clients its expectations on the crisis This report further damages the company's reputation.[4] In addition, Goldman Sachs has managed to settle or win other lawsuits over whether Goldman misled investors. While this represents the avoidance of material costs, the publicity of the suits may have hurt the company's reputation.[5]

Trends & Forces

Financial regulation will impact Goldman's operations

Regulation can alter GS's proprietary trading, hedge fund and private equity investments, and charge the company money directly[6] Additional or increased regulation can cause the bank to alter its operation or cause it to pay fines directly.

All holding banks will be prevented from engaging in proprietary trading and in any trades where there is a "material conflict of interest". In addition, "material exposure to high-risk assets or high-risk trading strategies" will be banned. While it is unclear what will be outlawed in the second two clauses, proprietary trading makes up a substantial portion Goldman Sach's annual revenue. While the impact may be large, the true extent depends on the interpretation and implementation of the regulation.[7]

Other regulation may place limits on the extent to which banks may invest in hedge funds or in private equity funds. These regulations come in contrast to Goldman Sach's high investments in such organizations. Furthermore, regulation imposing a fee to financial institutions that keep their money in the Federal Reserve would increase the cost of operation for Goldman Sachs.[8][9]


That error has been corrected. We will soon offer suisrcbptions, but for now content is, of course, free. For the Monday show, click on the date, that will take you to the page with the flash player. Thanks for your question and thanks for listening! Webmaster

Benefit from low interest rates

Interest rates can be thought of as the cost of borrowing money. Though the impact of interest rates spans across the economy, businesses and lenders are particularly sensitive to fluctuations in interest rates. As the Federal Reserve cuts the interest rate at which it lends out money, banks are able to gain access to "cheaper" money. [10][11] Low rates can allow Goldman Sachs to borrow money with low interest and increase its profit margins, while the inverse is also true.

Subprime lending: large losses

Subprime lending refers to the practice of extending credit or loans to borrowers to who fail qualify for prime or market rates due to their less than optimal credit scores. The interest rates associated with subprime mortgages have been higher than those associated with prime loans. The rationale is that borrowers with lower credit scores carry a higher risk of default and must therefore pay a considerable risk premium. Subprime borrowers can be extremely sensitive to interest rates. As rates rise, these borrowers, many of whom have adjustable-rate mortgages, find themselves unable to meet their debt obligations. However, during periods of economic downturn, the subprime borrowers are the most likely to foreclose. [12][13]

Private equity bubble burst

Private equity firms have engaged in leveraged buyouts, and borrowed substantial amounts of debt to finance their acquisitions of target firms. Goldman is involved in the PE process at several different points, including sourcing deals, representing the company being purchased, and facilitating IPOs or any subsequent equity or debt offering. Additionally, Goldman itself has significant investments in private equity, exposing it to conditions in the PE market. As a result, a decrease in private equity activity would have a substantial impact on Goldman Sachs' performance.[14][15]

Legal Activity and Negative Press

Goldman Sachs has been sued by U.S. regulators in the past for fraud tied to collateralized debt obligations. The SEC's case against Goldman Sachs claimed that the firm created and sold a portfolio that it expected to fail so that a large client could bet against it.[16] While this lawsuit and others have ended in relatively low cost settlements, they do negatively impact the public perception of the firm. This makes client acquisition more difficult and also makes the company more vulnerable to regulation from the US government.

Competitive Landscape

Goldman, unlike many of its peers, has not maintained an extensive retail brokerage sales force, opting instead to focus on higher-margin businesses such as investment banking and private equity. Goldman also derives a large portion (around two-thirds) of its revenue from sales and trading, both proprietary and on behalf of clients. Trading, particularly proprietary trading, has also remained a focus for Goldman Sachs. Its main competitors are:

  • Morgan Stanley (MS): Like Goldman Sachs, Morgan Stanley focuses on its investment banking arm. The two companies vie for the top position as the largest investment bank in the United States. Morgan Stanley is Goldman Sachs' most direct competitor on the investment banking .
  • J P Morgan Chase (JPM): is a diversified financial holding company which competes with Goldman on the trading and asset management side.
  • UBS AG (UBS): competes with Goldman Sachs on both the trading and asset management side and the investment banking side.
  • Lazard (LAZ): competes with Goldman Sachs over clients on the financial advisory and the asset management side.
  • Citigroup (C): While Citigroup is much more diversified then the other competitors, it retains an investment banking arm which competes directly with Goldman Sachs.



References

  1. 1.0 1.1 1.2 1.3 1.4 GS 10-K 2011 Item 1 "Business pg 2
  2. 2.0 2.1 GS 10-K 2011 Item 1 "Executive Overview" pg 37
  3. GS 10-K 2008 Item 1 "Equities" p.10
  4. NYTimes - Business Day "Goldman Sachs Group Inc."
  5. The Wall Street Journal "Mortgage Win for Goldman" July 22 2011
  6. The Washington Post "Financial regulation bill nears finish line with support from Snowe, Brown" 13 July 2010
  7. Market Watch "New regulations may cut big bank profit 13%, Goldman says" 28 June 2010 pg. 2
  8. The Boston Globe "Brown will back financial overhaul" 13 July 2010
  9. Market Watch "New regulations may cut big bank profit 13%, Goldman says" 28 June 2010 pg. 1
  10. Bloomberg.com, US Rates and Funds
  11. Federal Reserve Board "Open Market Operations" 16 Dec 2008
  12. The Wall Street Journal "Goldman Sachs Reports $2.1 Billion Quarterly Loss" 16 Dec 2008
  13. All American Patriots - Banking "Goldman Sachs Buys Back TARP Preferred Stock" 17 June 2009
  14. Goldman Goes All In on 'Secondary' Bet - WSJ.com
  15. The Guardian: Business "Private equity 'next bubble to burst,' unions warn" 3 Feb 2009
  16. New York Times - Business Day "Goldman Pays $550 Million to Settle Fraud Case" 15 July 2010
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki