Goldman Sachs (GS) 02 (May 10 - Dec 19)

Re: Goldman Sachs (GS) 02 (May 10 - Dec 18)

Postby winston » Thu Dec 20, 2018 10:46 pm

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The banking sector has been among the worst since the correction started in October. And Goldman Sachs (NYSE:GS) has been one of the stocks at the center of the fray.

Over the past two months, shares have plunged from $225 to under $175 today. That significantly outpaces losses for the broader financial sector, which clock in at 15% during this correction.

Goldman is facing one particular problem. That is its business dealings with 1MDB, a scandal-ridden Malaysia state investment fund. GS claims innocence, while Malaysia alleges bad faith on Goldman’s part.

In any case, banking scandals tend to occur frequently and usually don’t leave much of a lasting mark. In this case, Goldman’s involvement does not appear to have been enough to endanger more than a quarter or two of earnings at the worst.

And what earnings Goldman is having. Goldman is earning more than $25 per share annually, putting its P/E ratio at 6.5x. Analysts expect earnings to rise slightly next year.

The company is earning gobs of money and can pay dividends and buy back its extremely cheap stock. Additionally, once the trade war winds down, there should be renewed deal flow for its investment banking business along with clear sailing for the company’s growing asset management operation.

Don’t sleep on GS stock here. This is an unbelievable entry point for one of America’s strongest financial institutions.

Source: Investor Place
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Re: Goldman Sachs (GS) 02 (May 10 - Dec 19)

Postby winston » Fri Jan 11, 2019 6:40 pm

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Goldman Sachs could be liable for $5B in Malaysian scandal

By Kevin Dugan

Goldman Sachs may be on the hook for as much as $5 billion for its role in a Malaysian bribery scandal — twice previous estimates of a worst-case scenario, according to a report.

The Wall Street behemoth — which helped raise about $6.5 billion for the 1Malaysia Development Berhad, better known as 1MDB — faces increasing heat from regulators, federal prosecutors, and the Asian country over the deal, whose proceeds largely paid for bribes to government officials and the lavish lifestyle of playboy financier Jho Low.

Goldman will likely be forced to forfeit $600 million it made in fees, pay at least $1.2 billion in fines to the SEC, and at least another $2.7 billion in money returned to Malaysia, according to an interview with Peter Henning, a former criminal prosecutor at the Justice Department, which was published in a Thursday research report from Wells Fargo.

The rest would likely be doled out to other agencies investigating the bank, Henning said.

The sentiments were echoed by Wells Fargo analyst Mike Mayo, who has been critical of Goldman’s involvement.

“There is no way to minimize the mishap with 1MDB, and now it is a matter of assigning blame and the degree,” said Mayo, reckoning that charges could range anywhere between $300 million and $5 billion in a “worst-case scenario.”

Last month, UBS estimated that Goldman’s liability would top out at around $2.5 billion — one of the highest estimates at the time.

The staggering new liability estimates come despite the fact that government prosecutors are less willing to impose sky-high penalties than in previous years, said Henning, who was also an investigator at the Securities and Exchange Commission.

“The Justice Department and the SEC are unlikely to seek a large penalty in the current environment that takes into account the impact on shareholders who bear the ultimate burden of any penalty,” he said.

The funds allegedly embezzled by Low paid for luxury real estate, Basquiat paintings, a transparent piano for model Miranda Kerr and backing for the Leonardo DiCaprio movie “The Wolf of Wall Street.”

Last month, Malaysia and Singapore opened criminal investigations into the bank, adding to the SEC, DOJ, Federal Reserve and New York Department of Financial Services investigations that were already ongoing.

In addition, Malaysia’s finance minister told the Financial Times it’s looking for $7.5 billion in reparations from the bank.

The scandal has sent company’s stock tumbling by more than 35 percent, to $176.00 on Thursday, from its all-time high of $273.38 in March.

Investors are bracing for next week’s fourth-quarter earnings report from Goldman and will be looking for guidance from CEO David Solomon, who briefly defended the bank in a holiday video last month, saying Goldman did “detailed due diligence” in its role.

“We will look for him to attempt to ease the market’s concerns about GS’s involvement with 1MDB and the potential ramifications,” another bank, Barclays, said in its investor note Thursday.

Source: NY Post ... n-scandal/
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