For a 7-10 year timeframe is goldman a buy now?

Discussion in 'Wall St. News' started by BA736, Sep 25, 2008.

  1. BA736


    Is goldman a buy here at like 135 for the long term 7-10 years. Is there still a lot of debt that could possibily write down.

    Even if this 700b deal breaks down whats GS's liquidity status.

    Someone asked me about their personal portfolio holdings and they had a bunch of citi which they made quite a bit of money on the last few days since they bought it when it cratered. I explained that he is essentially gambeling but if thats what he wanted to do and it diddnt take up to large a percentage of his portfolio I diddnt see a huge proble.

    His stance is that he plans to hold them long term and he just thinks they are too cheap. (Hes not in the finance industry, just your average citizen)

    I then told him that I thought GS might be a better long term play esp since buffett took a 5bil stake.

    He is determined to keep citi but i was wondering how they are doing these days compared to GS. They have seemed to stay out of the press recently with all the other talk about lehman, freddie fannie, merrill etc

    Main question is, do people finally have a clear picture of what type of assets GS has on their books or is it still very much up in the air ala lehman pre collapse.

    Ive listened to a lot of conference calls with Loyd Blankfield and generally trust the guy. I havent listened to the most recent one since im been very busy with school and in cash since the dow was at 14000. I figure they are still levered in the 8-12x range? does this sound about right?

    Bottom line is that I see GS picking up a lot of new M and A and IB business while at the same time recruiting some of the best people on wall street and additionally strenghtining their risk manegment. Also possibly some brokerage accounts.

    He asked me to tell him if and when to pick up some GS but since im not an expert I wanted to get some other opinions as I have not stayed up to date on their liquidity or writedown issues. And now it looks like this bailout plan is stalled out in washington.
  2. JCVR


    Goldman is a buy for the one week, one month and one year time frame. Sure it is a bank but that is the only reason it's down to 135. GS doesn't have any appreciable exposure to all the toxic debt and were the only bank who managed to not only sidestep that mess, but short it and make a killing. They haven't had a loss yet and haven't even come close and they just scored 5 billion from buffet.
  3. Goldman is/was an excellent buy.the cream of the crop of banks/brokers.

    I personally own it from 135 and change.currently its close to 138. on its way to 150-55.then 175 then 200, which may take a few months.

    I already owned it before the Buffett news, and that just made my convictions even stronger.
  4. AAA30


    It will re test the lows within six months (sub 100). Going forward business will be much slower. Who cares if buffet bought he has prefered shares with 5 yr warrents attached.
  5. 2 comments

    #1 Equity dillution if Buffet converts the warrants later on

    #2 GS is now a commercial bank instead of an investment bank, which means it gets slapped with a lower P/E multiple
  6. jprad


    Agree, they have a lot of de-leveraging ahead of them.

    It also remains to be seen how hard they get hit with loss of their most talented staff who will want no part of a commercial bank.

    Tracking where these people go may be the better long-term play.

    All that's at least 1-2 years off, IMHO.
  7. In 7 to 10 years GS could go as high as 250 due to inflation. 115 is the top in today's money given lower leverage and shrinking economy.
  8. Buffet bought it. That's all i can say about fundamental investing.
  9. Pauly


    I wouldn't buy anything except T-bills for such a long time period. But if someone wants to go for 7 - 10 years, I would recommend going with Buffett over Goldman. BRK.A or BRK.B
    #10     Sep 27, 2008