Search results matching tag 'Goldman Sachs'

Goldman Sachs' upcoming blowout earnings

Louis Navellier — Wed, 14 Oct 2009 18:10:00 GMT

Banking giant Goldman Sachs (GS) is set to report earnings on Thursday and I, for one, am expecting an impressive blow-out.

As a behemoth on Wall Street, GS has managed to stay successful in both good times and bad. Shares are up nearly 100% over the past five years, while the Dow Jones Financial Services index fell 11% in the same time period. The future is bright for Goldman as well, with a five-year expected growth rate of 12.5%.

Bing: More on Goldman Sachs

Presently, Goldman Sachs is close to a 52-week high and closing in on the $200 per share mark. Over the past 30 days, more than half of covering analysts raised their third-quarter profit forecasts. Last quarter, the company beat expectations by $1.41.

The thing is, with a company like Goldman Sachs, it’s nearly impossible to give an accurate earnings forecast. The bank makes so much money from so many different sources, it’s like trying to herd cats.

Just look at recent results: In July, Goldman topped Wall Street’s forecast by nearly 40%, and in April the company more than doubled Wall Street’s consensus.

Another report like that would create a frenzy among traders and would send the shares well over $200.

The current consensus on Wall Street is for Goldman to report earnings of $4.81 a share, which represents growth of 130% over the same quarter last year.

Bear in mind that when Goldman converted to being a bank last year, the company changed its fiscal year to end in December. As a result, the fourth quarter of last year was actually a fourth-month quarter -- actually a third instead of a quarter, which may account for some of the astronomical growth.

The bottom line is that Goldman is a money machine. You can see why the press likes to call it Goldmine $acks. I should add that I’m very pleased that Goldman has paid all of its TARP money to the U.S. Treasury. It’s good to have the government off its back.

I rate Goldman a B, making it a solid buy.

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Goldman bonuses at highest level ever

Kim Peterson — Tue, 13 Oct 2009 15:05:00 GMT

Wasn't there some controversy over Wall Street bonuses recently? You wouldn't know it by looking at Goldman Sachs (GS), whose bonuses this year look to be the highest in its history.

Analysts estimate that Goldman's annual bonus pool has hit a record $23 billion -- and that's only through the third quarter, according to The New York Times. That's twice as much as the company awarded in 2008.

And in an attempt to quash the inevitable criticism of its excess, Goldman is reportedly considering making a huge donation to charity. Perhaps in the ballpark of $1 billion.

A nice gesture, but it won't make the bonus issue go away. And will shareholders be happy with Goldman donating that kind of cash?

The Times reports that Goldman executives are paid mostly in stock, which vests over four years. The executives are paid bonuses based on performance, and Goldman has performed extraordinarily well this year.

Will Goldman need to tone down its bonus numbers, which border on obscene? More likely, the Times reports, other Wall Street firms will be pressured to ramp up bonuses to Goldman-esque levels.

More than a third of Wall Streeters expect their bonuses to go up in 2009, a survey has found.

“Banks have reverted to what they do best, take risks and make money,” a recruiting executive told Bloomberg. “There’s a feel-good factor out there at this point. It’s not what it used to be, but it’s definitely better than 2008.”

Meanwhile, Goldman has been downgraded by banking uber-analyst Meredith Whitney. She cut the firm to neutral, saying that valuation is so high now that investors should lock in profits at current levels.

"No longer is the market underestimating Goldman’s franchise value or earnings potential,” Whitney said, according to Bloomberg. “The best money making opportunities in Goldman Sachs’s shares are being a contrarian bull rather than a consensus bull.”

In Goldman vs. rest of the world, Goldman’s winning

Minyanville — Tue, 06 Oct 2009 17:48:00 GMT

This article is written by Minyanville's Megan Barnett

This week has seen yet another round in the battle between Goldman Sachs (GS) and the Rest of the World. See also, Goldman Sachs Lightning Bolt Sparks Rally. On Monday, Goldman Sachs analysts Richard Ramsden and Brian Foran upgraded their outlook for big banks from neutral to attractive. The news sent shares of JPMorgan (JPM), Bank of America (BAC), and Wells Fargo (WFC) sharply higher. And yes, even Goldman Sachs shareholders benefited from the news, as its shares jumped nearly 4%.

The upgrade baffled many banking analysts and it came against a backdrop of negative opinions. And these aren't just slightly bearish views -- they're downright scary outlooks that suggest some of the worst still lies ahead for banks and the rest of the economy. Here's a sampling:

Meredith Whitney, the analyst who made her name as a banking bear at the start of the credit crisis, penned an op-ed for the Wall Street Journal last week in which she predicted that small businesses will become the next victims of the crisis since their access to credit is being denied by banks and other lenders. She believes “we are only in the early stages of the second half of this credit cycle."

George Soros reiterated his gloom for a roomful of global financial policy wonks in Istanbul yesterday, saying that the US economic recovery will be extremely slow thanks to the “basically bankrupt” banking system at its core.

Nouriel Roubini, perhaps the greatest lover of gloom, agreed with Soros, predicting that the S&P 500 will fall below its March 9 low. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability,” he said.

Chris Whalen, managing director at Institutional Risk Analytics, said yesterday he believes the fourth quarter will “be a bloodbath” for the banking sector. The reasons? Banks' assets continue to shrink, more write-downs are coming, and access to government money is going to shock the system.

Joseph Stiglitz said that the stock-market rally is little more than irrational exuberance and that the economy can’t grow fast enough to slow unemployment, which he said “will continue to get worse.”

Many of these comments came as the World Bank and the International Monetary Fund prepare to meet in Istanbul, but it was once again Goldman Sachs that came down on the opposite side. From Bloomberg:

“In a separate Bloomberg Television interview yesterday, Goldman Sachs Group Inc. Chief Economist Jim O’Neill said the International Monetary Fund meetings in Istanbul are 'stuck' in an outdated mentality that doesn’t reflect the rising power of emerging economies following the global financial crisis. O’Neill also said the dollar probably isn’t the No. 1 concern for US policy makers, and predicted 4.1% growth for the global economy next year. Many countries will be 'surprising' in their economic growth in 2010, he said, while adding that there is potential for more 'positive surprises' that could help fuel global expansion.”

Perhaps not surprisingly, the stock market continues to favor Goldman’s unfettered optimism. The views from the banking analysts and its chief economists are opinions, of course, but they're opinions from the bank that perhaps suffered the least during the credit crisis. It’s the bank that continues to come out on top, whether its in American International Group’s (AIG) survival or in CIT Group's (CIT) bankruptcy. If it has reason to be hopeful, that's all that plenty of investors need to hear.

But the reality will likely be somewhere in between the doomsayers and the wearers of rose-colored glasses. As Todd Harrison pointed out last week (Will “Write-Ups” Bolster the Financials?), the banking sector could get a boost from write-ups as certain credit markets have thawed, but that may only mask the deeper problems that remain. See also, Why Earnings Look Opaque Beyond Third Quarter.

The ugly numbers that lie ahead for the banking sector -- and there will certainly be some -- are still an unknown, and investors are choosing instead to focus on the positive ones that are known today: An IPO market showing signs of life, the return of merger Mondays, the raising of funds to pay back governments both here and abroad. Even investment bankers themselves are bullish on their own financial outlook: One-third of Wall Street workers expect their bonuses to be higher in 2009, according to a recent poll.

But the good signs won't likely be enough to fuel a recovery. Hope for the best, prepare for the worst. At least we’ve all learned the first part of that lesson.

No positions in stocks mentioned.

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TARP recipients abuse borrowers

Jim Van Meerten — Mon, 05 Oct 2009 15:23:00 GMT

Over the weekend, McClatchy Newspapers had two powerful articles entitled "Help with mortgages is difficult to come by" and "Some firms with spotty pasts get tax dollars."

The articles expose how firms like Bank of America (BAC), Citigroup (C) and Morgan Stanley (MS) -- firms who were bailed out from the brink of bankruptcy by TARP with billions of taxpayer dollars -- are now abusing mortgage borrowers who are in trouble. The Treasury is doing little, if anything to monitor the situation.

In one case, Ronnie Fruia was about to lose his home when he, his mother and son were all hospitalized. He was recovering from a stroke and couldn't talk, but CitiFinancial sent someone to his hospital room to sign modification papers that didn't even cut his interest rate. State regulators had to step in to get his rate changed from 11.5% to a reasonable 5%.

In another case, Countrywide, a subsidiary of Bank of America, put a woman in default while she was being treated for breast cancer. Her church had raised money to keep her mortgage out of default but Countrywide refused to take a payment from the church.

Saxon Mortgage Services, a unit of Morgan Stanley, was sued by the attorney general of Missouri when he found that Saxon failed to properly credit loan payments to accounts even after the borrowers had proved that the payments had cleared their bank accounts. They even charged late fees though the mortgages were current.

The Government Accountability Office (GAO) in July found that the Treasury was short-staffed and had hired only half of the employees necessary to monitor the loan modification program.

Taxpayer dollars bailed out the banks from bankruptcy. Now the banks are on track to pay big bonuses while at the same time foreclosing on the very taxpayers who bailed them out. They have only worked with 12% of the mortgage holders that qualify for the Treasury's mortgage modification program.

Isn't it ironic that the bailout money goes to the very firms that invented these adjustable loans that got borrowers into this mess -- and now they turn their backs on borrowers trapped in their predatory lending schemes?

Jim Van Meerten is an investor who shares his opinions on financial matters on Financial Tides, MSN Top Stocks Blogs and Seeking Alpha. Please leave your comments below or email FinancialTides@gmail.com.

Disclosure: I hold no positions in the companies mentioned in this post.

5 pricey stocks worth every penny

InvestorPlace — Mon, 28 Sep 2009 17:02:00 GMT

This article was written by InvestorPlace's Jim Woods.

Quick quiz: When is a bargain not a bargain?

Of course, you know the answer: When it ends up costing you more money in the long run.

Such is the case with a lot of so-called bargain stocks. But the flip side can also be true. High-priced stocks -- those with share prices in the three, four, five, even six-digit range -- can be real bargains, because the companies are worth every penny, and even more importantly, they have potential to see even bigger gains ahead.

Bing: More on Bargain Stocks

Here are five of my favorite "expensive stocks" that are currently selling at bargain prices.

Stock #1 -- AutoZone (AZO)

AutoZone (AZO) is a specialty retailer and distributor of automotive replacement parts and accessories. Its stores offer the do-it-yourselfer tremendous value on parts and accessories. The company stocks all kinds of parts and has a great sales staff. In my experience, their parts personnel have always been very knowledgeable and extremely helpful.

On Sept. 23, the company reported a 3% decline in its fiscal fourth-quarter profit. This decline in earnings could have been the result of the government's "cash for clunkers" plan, which saw many older vehicle owners turn in their cars for a credit toward the purchase of a new vehicle. But apparently, analysts who cover AZO weren't too perturbed by the company's numbers. FBR Capital Markets upgraded AutoZone to "market perform" from "underperform" after the earnings news.

Despite its high price tag, AZO could still drive your portfolio higher.

See also: 10 More Clunkers That Could Use Some Cash

Stock #2 -- CME Group (CME)

As an observer of financial markets, I've been stunned by the recent growth of options trading. Options and futures trading have become huge among individual investors, and the interest in the topic is only getting bigger. So, who benefits most from the surge in options and futures trading? CME Group (CME).

CME Group is the company that operates the Chicago Mercantile Exchange and the Chicago Board of Trade, the place where options and futures trades actually take place. Whenever you place an options or futures transaction, the only sure winner in the game is CME Group.

As more and more individual investors embrace options and futures trading, CME Group's bottom line is likely to keep on trucking. CME shares now trade above $300, but they've been as high as $710, making this a high-price stock a bargain.

Stock #3 -- Goldman Sachs (GS)

What can you say about this crown jewel of brokerage and investment banks that hasn't already been said? Goldman Sachs (GS) is, by far, the most prestigious, as well as the most politically-connected, bank on Wall Street. Its success over both the fat years and the lean years has been difficult to ignore.

So it's no wonder then that shares of this iconic financial giant are up nearly 100% over the past five years, while stocks that comprise the Dow Jones Financial Services index were down 11% over those same five years.

If you want to own the best-of-breed in the financial sector, then Goldman Sachs is the high-priced bargain stock for you.

Stock #4 -- Apple (AAPL)

If you're a member of the Apple (AAPL) cult like I am, you already know the near-religious commitment we have to the anything Steve Jobs and company bring to market. Sure, the company makes the most expensive computers out there, as well as the costly iPhone smart phone, but to us addicts, money is really no object.

Apparently, we hardcore Apple fanatics aren't the only ones who feel this way. The company's stellar recent earnings beat was just the latest in a string of consistently better-than-expected quarterly performances. And when it comes to what Wall Street thinks, well, I suspect over 100% return year-to-date, as well as a near 900% gain over the past five years in AAPL shares tells you what you need to know about the stock's appeal.

The Apple juggernaut is perhaps the best-of-breed personal technology company operating today, and their high-priced shares confirm this. The way I see it, Apple is a bargain at almost any price.

Stock #5 -- MasterCard (MA)

I'd venture a guess that you have at least one, if not multiple, MasterCard (MA) credit cards in your wallet right now. In addition to its credit card division, the company provides transaction processing services to its customers that support of their credit, deposit access, electronic cash and automated teller machine payment card programs. The goal of the company is an ambitious one: To put the use of cash out of business.

The stock has certainly been on a tear since its 2006 debut, rising to over $300 per share near the midway point of 2008. Yes, the recession and accompanying consumer spending pullback took its toll on MasterCard in late-2008 and early 2009, but despite the tough economic environment, MA shares are up over 50% year to date.

Sure, MA is trading at a high price, but in my opinion the stock still should be considered a great bargain.

Click here for the complete list of Expensive Stocks That Are Worth Every Penny.

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Goldman lobbyist banned

Kim Peterson — Thu, 17 Sep 2009 15:59:00 GMT

This doesn't look good for Goldman Sachs (GS). It hired away a former staffer in the House Financial Services Committee and turned him into a lobbyist working directly with that committee. Smart move.

Unfortunately, Rep. Barney Frank has banned that lobbyist from communicating with any committee members or staff for another year (the lobbyist got a one-year banishment in September of 2008).

The committee is considering a huge list of financial reform suggestions -- and some of them would have a direct effect on Goldman, Reuters reports.

Frank extended the one-year ban "out of an abundance of caution due to the nature of financial regulation reform," an aide said.

So how is Goldman going to inappropriately influence potential legislation now?

At the time of this writing, Kim Peterson did not own shares of Goldman Sachs in personal or client portfolios.

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Will Congress be to blame for runaway inflation?

Minyanville — Thu, 17 Sep 2009 15:57:00 GMT

This article is written by Minyanville's Andrew Jeffery

Federal Reserve Chairman Ben Bernanke may have kept his job for another four years, but that doesn’t mean it’s going to be any easier than the last four.

With pundits, politicians, and regulators sounding the trumpets that our latest bout with recession is likely behind us, central banks and Treasury Departments around the world are looking forward at the daunting task of removing the various forms of stimulus -- which, in the estimation of former Merrill Lynch economist David Rosenberg, have contributed 100% of global economic growth this year. See "Staying Neutral on Inflation vs. Deflation."

European Central Bank Chief Jean-Claude Trichet even took out space in the Financial Times to lay out his vision for the eventual withdrawal of “enhanced credit support,” which helped prop up local, and indeed global, financial markets.

Here at home, Bernanke’s much maligned predecessor, Alan Greenspan, is voicing concern that Congress could complicate the Fed’s already delicate task of keeping the economy grinding ahead without waking the sleeping giant of inflation.

According to Bloomberg, in a radio broadcast to clients in Tokyo, Greenspan said he doubts US politicians have the will to withdraw stimulus if unemployment remains stubbornly high.

And since Bernanke tossed the Fed’s “independence” to the wind when he embroiled the Fed in the highly political bailouts of financial giants AIG (AIG), Citigroup (C), Fannie Mae (FNM), Freddie Mac (FRE), Goldman Sachs (GS) and, well, the entire American banking system, his ability to ignore rambling lectures and intense pressure from the economic simpletons on Capitol Hill will be minimal, at best.

If prices begin to tick up -- which they are yet to do thanks to the fundamental deflationary forces still hard at work -- Bernanke’s narrow tightrope will shrink further still.

In order to keep inflation at bay, Bernanke’s primary tool is raising interest rates, which thwarts economic growth by making borrowing more expensive for firms and individuals alike. But should he leave the floodgates of cheap money open too long, he risks igniting what many experts believe will eventually become runaway inflation.

For now, Bernanke has a bit of time on his side. The deflationary debt unwind is still going strong, as consumers and businesses get used to life after easy credit -- where cheap debt is no longer the engine of economic growth. This holiday from getting rid of the economy's training wheels, however, can't last forever.

If what has thus far been a recovery almost exclusively from massive government intervention into markets can transition into something more sustainable, Bernanke will be forced to man up and fight for the virtues of price stability. This will come at a heavy political cost.

But after all, isn't that what the central bank was created for in the first place?

For an opposing view, see "Why We're Facing Deflation."

No positions in stocks mentioned.

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Navios Maritime keeps on swimming

AllStarPortfolio — Mon, 14 Sep 2009 23:00:00 GMT

This is my maiden voyage into the world of stock analysis and I thought why not play it safe and write about the best buy in the world. Navios Maritime is a shipping company and probably one of the most conservatively managed shippers of the publicly traded companies. Shipping rates measured by the Baltic Dry Index (BDI) are down 65% yoy when the S&P 500 is down 25%. Much of the world is now becoming industrialized as the economies of Brazil, India, Russia, and China are growing and stabilizing and will continue to over the next decade or so, which will increase the consumption of half of the world population. This will increase shipping rates back to rates we have seen in 2008 in the coming years. http://caps.fool.com/player/allstarportfolio.aspx In the meantime, Navios Maritime has charter-out coverage on 99% of their vessel voyages for the rest of 2009. This is by far the highest rate in the industry and thus they have "locked-in" profits for 2009. They are chartered to make $0.67 per share this quarter not including any one times items or sales. They have already added 9 new vessels all capesize vessels which basically means higher charter rates and larger load capabilities. Navios Maritime also has a 81.4% charter-out rate in 2010 with an equivalent of $307 million in revenue, for a 20% increase yoy locked in. In addition, they have $300+ million locked in in charter-out revenue for 2011 and 2012 with only 63.2% and 57.7% of their days chartered-out respectively. This shows that Navios Maritime expects growth from today's earnings levels which are presently under valued with today's earnings power. Navios Maritime is currently trading at a P/E of 8 for full year 2009 earnings. With the 20% growth in revenue and assuming earnings as well they are trading at a forward P/E of 6.5. It does seem fairly safe to say that earnings will grow at a 20% clip over the next three years by looking at the incredible ability of the company to lock in charter-out rates of approximately $35,000 daily in 2012 and $30,000 a day in 2010 when the average daily long-term charter-out rate in 2009 was slightly above $10,000. Finally, as if guaranteed profits and P/E's of under 8 weren't good enough the company is actually trading at a 40% discount of its shareholder equity. Current shareholder equity as of June 30, 2009 is $850+ million dollars and shareholder equity grew by 8% last quarter. The current market cap is $531M. In conclusion, I picked Navios Maritime for dissection because this is they type of company I would like to see my readers (the few of you) and future readers to buy. You must start with fundamentals. You would never use $500 million of your own dollars to buy a company on a technical breakout on a chart so don't do it even if your buying a portion of the company. Navios Maritime really impresses me with their debt. It is just over a year since Lehman and a companies balance sheet seems to be the only thing that matters now. Navios Maritime has been receiving new loans at 6% interest in a time when GE and Goldman Sachs took out loans from Warren Buffett for 10%. Navios Maritime currently has a 4.5% yield with an expected payout ratio of 35.8% which is considered fairly safe. They have $210M in cash and they have purchased 6 vessels at a 6% interest rate during a credit crisis. A lot of lenders believe in Navios Maritime's ability to pay off debt and the savings from low interest rates will be seen directly in net income and thus stock prices. I see Navios as a long-term contender to overtake DryShips as one of the largest shippers in the world. I currently have a price target of $14. Which would allow for a p/e of 12 next year and a dividend of 1.7%. AllStarPortfolio is a group of top-rated members of the MSN/Motley Fool Caps community working together to build a portfolio using the reader-rating system. At the time of writing I currently own shares of Navios Maritime [NM]. stocki711, member of AllStarPortfolio All information from Navios Maritime was taken from their most recent quarterly report or their most recent annual report with the most current statistics used in the event of both reports containing information pertinent to the article.

Goldman CEO tops Vanity Fair list

Douglas McIntyre — Tue, 01 Sep 2009 10:51:00 GMT

Vanity Fair has announced its “New Establishment 100″ list for 2009, basing selections on wealth, influence, and philanthropy, as well as such intangibles as vision and "X factor.”

Topping the list is Goldman Sachs (GS) chief executive Lloyd Blankfein. Apparently, the big pay packages that he and his top executives get are not enough to erode his power in the business community. Blankfein was in the No. 2 spot a year ago.

Second on the list is Steve Jobs, chief executive of Apple (AAPL). He should arguably be at the top. He is clearly the most influential and powerful chief executive in America, taking a role that Jack Welch of General Electric (GE) once had.

Third on the list is Jeff Bezos of Amazon (AMZN). He has turned a rather prosaic e-commerce business into a digital powerhouse. Fourth on the list is Warren Buffett of Berkshire Hathaway (BRK.A), whose investment performance was poor over the last year, but still probably has the best track record of any major investor in the last half century.

Rounding out the top five are Eric Schmidt, Larry Page, and Sergey Brin, the leaders of Google (GOOG). It is a bit of a cheat to look at them as a group. It is also open to question whether they belong so high on the list. Google’s fortunes have flagged over the last year as its growth has slowed considerably.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Goldman gets a subpoena

Kim Peterson — Thu, 27 Aug 2009 16:57:00 GMT

Earlier this week, news emerged that Goldman Sachs (GS) was giving extra stock tips to a small group of preferred customers. These tips came straight from the internal "trading huddles" that the firm's analysts attend.

After the huddles end, several dozen special (read: rich) customers get called and filled in. For everyone else, well, there's always the published reports that may come out days later, and may not have the same insight.

The news of this preferential treatment -- first reported by The Wall Street Journal -- is not sitting well with regulators. It's not that all customers have to be treated equally. No business does that. The question is more of whether Goldman actually hurts some clients by not providing all the information they need.

Bing: More on Goldman's trading huddles

The chief financial regulator of Massachussetts has subpoenaed Goldman and wants to know more about the trading huddles, the Journal reported Thursday. The Securities and Exchange Commission is also reportedly looking into theissue, as is an industry self-regulatory body called the Financial Industry Regulatory Authority.

The discrepancy seems to arise from whether all Goldman clients get the same information. Goldman says that the talk coming out of its huddles is always consistent with the fundamental analysis in its published research reports. But the Journal reported some examples where that didn't appear to be the case.

One analyst, for example, had a published "neutal" rating on Janus Capital Group, but said in the huddle that the stock was likely to rise. Which it did. And the rest of Goldman's clients wouldn't get this insight until six days later.

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