Goldman Sachs (GS) 01 (Jun 08 - Apr 10)

[HengHeng]

actually on GS i think u might be wrong , they are pretty safe in that context. Usually internally if they think that the bet is wrong they usually hedge against their own positions by taking the other side.

[millionairemind]

October 28, 2008

Goldman faces hardship of life as just another bank
Tom Bawden in New York and Helen Power

A few months ago the prospect of Goldman Sachs approaching Citigroup to discuss a merger would have been unthinkable — Goldman appeared to be the one Wall Street firm immune to a credit crunch that had saddled Citigroup with tens of billions of dollars of losses.

But on September 22 Goldman's chief executive placed a call to his opposite number at Citigroup to discuss a tie-up. Vikram Pandit, Citigroup's chief executive, rejected Lloyd Blankfein's proposal immediately.

With Bear Stearns gone and Lehman Brothers a busted flush, the febrile atmosphere in the markets produced extraordinary turbulence for standalone investment banks. It was enough to prompt the Federal Reserve, which became Goldman's regulator on September 21, after Goldman's conversion from a securities firm to a commercial bank, to ask Mr Blankfein to pick up the phone to Mr Pandit.

Although accounts vary about which party the Fed thought would be the main beneficiary of the deal, in an environment where retail deposits are king, Goldman would have had access to hundreds of billions of dollars of account holders' cash at a time when money is a scarce commodity. Citigroup would have gained a financial brand with the clout to boost its share of the investment banking market. Goldman is understood to have been in two minds about a deal with a huge organisation such as Citigroup, which one executive said would have been “like taking on the National Health Service”.

By the time Mr Blankfein called Mr Pandit, Goldman was on the verge of raising $10 billion, half from Warren Buffett from the sale of new shares. Goldman's cash position has been bolstered this month, by a further $10 billion injection, this time from the US Government, as part of its $250 billion recapitalisation of the banks.

Goldman Sachs' revered business model is under increasing scrutiny. As one fund manager with ties to the bank said: “Goldman is broken. It used to make huge profits from leveraging up at 30 to one, but it won't be doing that any more. People at Goldman are very concerned about their future ability to generate those sorts of profits. But there is nowhere for them to go.”

That is a view shared by some other market participants. Pete Najarian, an options trader in New York, said: “Some of the shine is definitely off Goldman Sachs. People expect Goldman Sachs to be different from everybody else but now they are proving to be no different. They have fared much better than most, but they are having to make the same decisions as other people now, showing a few chinks in their armour.”

Adam Compton, an analyst at GMT Capital, added: “Goldman Sachs was the best house, but it was in a really bad neighbourhood. It did better than everybody else, but was hit by a business model problem.”

In the wake of the Lehman Brothers' demise, investors feared that these highly leveraged investment banks would be unable to secure the finance they needed to run their operations.

Not that Goldman Sachs' staff are in the business of letting on that their future may not be so rosy. According to one banker at a rival firm, Goldman staff “appear as cocksure and arrogant as ever and they would be even if the world were about to end”.

However, since becoming a commercial bank, Goldman has announced a 70 per cent decline in third-quarter profits, in what Mr Blankfein admitted was a “challenging quarter”, and a plan to cut 3,300 jobs, or 10 per cent, of its global workforce.

Furthermore, Mr Najarian said that the terms Goldman offered Mr Buffett to invest in it were regarded as so desirable that it made the bank look a bit desperate. It is understood that HSBC was also contacted about becoming an investor before the agreed share sale to Mr Buffett.

Some investors also question what the credit crunch means for the sometimes fractious relationship between the bank's principal investment business, which invests from its own balance sheet, and its advisory arm. After years in the shadows, investment banks' advisory arms are in the ascendancy as banks are thrown back on traditional client-facing work.

Rival banks claim that Goldman, which advised its client Bradford & Bingley to accept a bid from TPG, the private equity firm, that was later pulled, wanted to invest alongside TPG on later banking deals. Goldman has always denied a conflict.

Shares in Goldman Sachs, which stood at $200 in April and fell to $88.30 on October 10, declined by $7.52, or 7.49 per cent, to $92.88 at the close in New York.

[millionairemind]

Will the Great GS finally post a loss???

Goldman may be set to post first quarterly loss
Fri Oct 31, 2008 6:43pm

NEW YORK (Reuters) - Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) could post its first ever quarterly loss as a public company in December, as market turmoil weighs on revenue for investment banking businesses and forces asset writedowns.

One Wall Street analyst, Glenn Schorr at UBS, predicted a loss for the bank on Friday. The potential for a quarterly loss, combined with the generally weaker environment for financial institutions, has some investors wondering if Goldman Sachs really deserves to trade at a higher valuation than Morgan Stanley, (MS.N: Quote, Profile, Research, Stock Buzz) the other major independent investment bank that is now a commercial bank.
http://www.reuters.com/article/ousiv/id ... RI20081031

[millionairemind]

Goldman fund loses $990m after 10 months
By Kate Burgess in London

Published: November 3 2008 23:31 | Last updated: November 3 2008 23:31

One of Goldman Sachs‘s flagship hedge funds, run by two of the Wall Street bank’s most talented traders, has lost close to $1bn since its launch in January in further evidence of the crisis facing the industry.

Goldman Sachs Investment Partners, which was hailed in January as one of the biggest hedge fund launches, raising more than $6bn, has told investors that it had lost $989m by September. It said the fund was down about 13 per cent in the third quarter. Year-to-date performance fell about 15.5 per cent in the year to September.

The managers said: “We are disappointed with our performance.” But they added: “GSIP is not alone in producing disappointing returns this quarter and this year.

“We anticipate that these results will lead to net outflows from the hedge fund industry.” Hedge funds have had a horrible year with asset prices in free fall, redemptions at record levels and banks imposing tougher conditions on lending, prompting some managers into fire-sales.

GS Investment Partners, which imposed a two-year lock-in at launch and has a strong bias towards equities, is managed by Raanan Agus and Kenneth Eberts, former heads of proprietary trading desks at Goldman.

The fund was launched after a poor year for the bank’s quantitative, or computer-driven, hedge funds which were hit hard in August 2007 forcing the bank to inject $3bn to rescue its Global Equity Opportunities fund.

More than half of GS Investment Partners’ losses in the third quarter was from its investments in commodities, basic materials, metals, mining, energy and agriculture. But like many multi-strategy funds diversified across equity, credit markets and convertible bonds, GS Investment Partners was hit hard by losses on convertible bonds – debt instruments that can convert into equity. It said returns from the convertible asset class had been “abysmal”.

The Hedge Fund Research convertible bond index showed returns had dipped 20 per cent in the year to September. The falls accelerated sharply in October.

Assets in Citadel’s largest fund, Kensington multi-strategy fund which has about $13bn under management, fell 37 per cent in the year to October 27.

Deephaven Capital Management in the US has told investors that it was suspending withdrawals from its $1.6bn Global Multi-Strategy fund and working on “a plan for the continuation of the fund” after suffering in virtually every market in which it was invested.
Copyright The Financial Times Limited 2008

[millionairemind]

Goldman begins layoffs
It is cutting 10% of staff

NEW YORK - GOLDMAN Sachs Group has begun notifying about 3,200 employees globally that they have lost their jobs, as the world's biggest investment bank slashes expenses to ride out the financial crisis, a person familiar with the situation said on Wednesday.

The job cuts, which were first reported last month, are a reflection of the ongoing downturn in the credit and lending markets that triggered massive losses for banks around the world.

Goldman Sachs had been considered the strongest investment bank on Wall Street, and earlier this year had expected its payrolls to expand.

Positions will be cut across Goldman's offices globally and among various business lines, and will bring the company's staffing to 2006 and 2007 levels, the person said. He spoke on condition of anonymity because the company hasn't publicly disclosed details of the plan.

According to CapitalIQ, Goldman has more than 37,000 employees across its operations.

There also have been reports that Goldman's army of bankers might see their bonuses cut in half this year.

Difficulties at the firm demonstrate that even the industry's most powerful player is not immune to fallout from the unprecedented financial turmoil.

On Monday, Merrill Lynch analyst Guy Moszkowski predicted that Goldman would report a loss for the fourth quarter - its first since going public in 1999. The stock market's plunge has created a brutal atmosphere for some of Goldman's once high-flying businesses, such as private equity and proprietary trading.

During its fiscal third quarter, which ended Aug 31, the company's profit fell 71 per cent, but that performance was still better than many of its competitors, which have reported quarterly losses throughout much of the year.

But, September was considered one of the worst months during the credit crisis as banks essentially stopped lending money to each other for fear loans would not be repaid.

Problems intensified when Lehman filed for bankruptcy and the government loaned insurer American International Group US$85 billion (S$126 billion) to help it remain in business.

'The short-term outlook for the company is poor,' said Mr Richard X. Bove, an analyst with Ladenburg Thalmann. 'I have had a 'Sell' recommendation on this stock most of the past few years'.

'The reason is that the market did not seem to understand the risks in this company. Those risks are now being made clear.'

Last month, as Merrill Lynch hastily sold itself to Bank of America, Goldman and fellow independent investment bank Morgan Stanley received approval to become bank holding companies. Former rival Bear Stearns was snapped up at a steep discount by JPMorgan Chase in March.

Goldman and Morgan Stanley made the change to bank holding companies as investors worried the stand-alone investment bank model may no longer be viable.

The new status allows Goldman to grow a large deposit base to help fund its operations, while providing permanent access to borrow money from the Federal Reserve. Before changing its status, Goldman only had temporary access to that lending option.

But it also opens Goldman up to increased regulatory scrutiny, which could force it to scale back some of its more leveraged and aggressive business units.

Goldman also struck a deal with billionaire investor Warren Buffett to sell preferred and common stock to Mr Buffett's Berkshire Hathaway As part of the deal, Mr Buffett planned to invest at least US$5 billion in fresh capital to help Goldman and could double that investment to $10 billion.

At the same time, Goldman issued common stock to raise an additional US$5 billion through a public offering.

Shares of Goldman fell US$7.57, or 7.8 per cent, to close earlier at US$87.43. A year ago, the stock traded at a 52-week high of US$240.05. -- AP

[winston]

I believed that it is better to have pay cut than to retrench people. When business turnaround, they need to rebuilt the teams again.

Anyway, I heard today, that at an American Investment Bank ( actually, they dont exist anymore ), they fired two admin assistants while keeping their expensive expat MDs and Partners around . Headcount reduction mah. Good PR. They did not say how much they would be saving in salaries and bonuses.

BTW, headcount reduction saves money only in the US as Medical expenses there is very expensive. In Asia, you can hire an army of good people for one of this useless expat Partner or MD, who dont really contribute anything to the bottom-line but can create tons of useless work, in order to justify their existence.

In GE many years ago, Neutron Jack took off two layers of Management and the company did not noticed that those two layers of management were missing. I think there were 7 to 8 layers between the CEO and the guy at the bottom, with various Matrix Reporting structures at that time.

[kennynah]

Anyway, I heard today, that at an American Investment Bank ( actually, they dont exist anymore ), they fired two admin assistants while keeping their expensive expat MDs and Partners around . Headcount reduction mah. Good PR. They did not say how much they would be saving in salaries and bonuses.

and rightfully so...being such a nincompoop

[millionairemind]

Not sure if any1 is paying attention to GS..

It closed last night at $71... this is way down from the price of $125 when WB put in a $5B stake.

Perhaps the street knows something that WB doesn't??? Strange...

Published November 11, 2008

Goldman prunes property-linked jobs here
Some have been offered positions elsewhere in group

(SINGAPORE) About a dozen jobs in Goldman Sachs' real estate-related operations in Singapore were lost under a global downsizing involving some 3,200 employees at the US bank last week.

BT understands the bulk of the positions cut here were from the real estate principal investment team, which looks after property investments by the bank as well as its managed property funds in Southeast Asia, principally Singapore.

Some of them have been offered positions elsewhere in the group, but the team has been reduced to just one or two persons, who have been moved out of Singapore, BT understands.

Others in Singapore who lost their jobs include a banker who used to help out with the real estate investment banking team, as well as an analyst with the equity research team.

Goldman Sachs' spokeswoman in Hong Kong declined to comment on the job cuts in Singapore when contacted by BT.

Last week's cuts of 3,200 jobs were part of previously reported plans to slash 10 per cent of the firm's global workforce amid slumping markets.

Goldman Sachs-linked property funds own three office buildings in Singapore - DBS Building at Shenton Way, as well as Hitachi Tower and Chevron House.

Sentiment in the Singapore property market, particularly offices, has been hit badly by the global financial crisis and fears of oversupply. In addition, the Singapore real estate investment trust (S-Reit) sector has also taken a hit because of the slump in equity markets as well as refinancing fears amid current tight liquidity. Several planned Reit IPOs have also had to be postponed indefinitely.

Market watchers noted that two of the office blocks Goldman Sachs funds bought here (Hitachi Tower and Chevron House) were at near-peak prices while the bank failed to offload its earlier buy - DBS Building along Shenton Way - in a timely manner.

It bought DBS Building in late 2005 for $690 million or $789 per square foot (psf) of net lettable area. Chevron House (formerly Caltex House) at Raffles Place was purchased for $730 million or $2,780 psf in August last year. The building stands on a site with a remaining lease of about 81 years at the time of the deal.

Earlier this year, a Goldman fund bought the 999-year leasehold Hitachi Tower at Collyer Quay for $811 million or about $2,900 psf.

[kennynah]

~ $67 tonight.... 1/2 of WB's 5bil down the toilet

[millionairemind]

Goldman shares enjoy rebound
Yet another analyst warns of fourth-quarter loss for bank; CEO Lloyd Blankfein says firm is "well positioned."

NEW YORK (AP) -- Goldman Sachs Group Inc. shares finished higher Tuesday, even as another analyst slashed financial forecasts for the bank amid the ongoing problems in the credit and equity markets.

Shares of Goldman (GS, Fortune 500) ended nearly 5% higher after sinking sharply earlier in the day. Weighing on shares was a research note from Fox-Pitt Kelton's David Trone, who became the latest analyst to predict the bank will post a fiscal fourth-quarter loss.

Trone estimated Goldman will report a loss of $1.55 per share for the quarter ending Nov. 30, compared with a prior estimate for earnings of $2.59 per share. Trone also slashed his 2009 earnings estimate to $9.08 per share from $12.15 per share.

Analysts polled by Thomson Reuters, on average, forecast earnings of $1.16 per share for the fourth quarter and $12.02 per share for 2009, though average estimates have sharply fallen in the past month.

A month ago, analysts, on average, forecast earnings of $2.71 per share for the fourth quarter and 2009 profit of $13.53 per share.

In a research note, Trone said Goldman's results are heavily tied to global equity markets, which have plummeted during the past three months. The losses will be especially apparent in Goldman's principal investment portfolio, he added.

Those projected losses could change dramatically, though, in the three remaining weeks in the quarter, depending on the movement of markets, Trone said.

Goldman Sachs Chief Executive Lloyd Blankfein offered no insight as to how the company would finish the quarter in a presentation Tuesday afternoon.

Speaking at the Merrill Lynch Banking and Financial Services conference Tuesday in New York, Blankfein would only say that his firm was "as well positioned as any financial firm out there."

Blankfein stressed that the company remains largely committed to its investment bank business model even as it converted to a bank holding company in late September. He added that the company was looking to build up its deposit base, adding that it could come through acquisitions.