Opinions
Lorne Steinberg
Goldman Sachs
GS-N
TOP PICK
Aug 08, 2016
Stock price when the opinion was issued
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Of the big banks, they are the most levered to investment banking, including IPOs. He bought it expecting an uptick in IPOs under Trump, but his tariffs have temporarily derailed that. The IPO revival should happen if tariffs don't return. This pulled back hard since mid-February because of those tariffs, down 35%.
Is perfectly positioned for the tailwinds under the Trump presidency. After April's tariffs, corporate boards have been sitting and waiting, reluctant to do deals, but a strong capital market will eventually happen. Pays a good dividend and are very well-capitalized.
(Analysts’ price target is $596.61)The capital markets banks are all performing really well. That tells you something about the rest of the market; if investors are focusing on these banks, then they must have a view that lots of deals will be done and that capital markets provide a good opportunity. He'd buy more.
He's not a good trader. To paraphrase: "There are bull markets and bear markets, but at the end GS wins." We've seen that this quarter with respect to their trading profits. It's been a great way to play capital markets forever, and all the banks' capital markets divisions are doing well.
This has suffered along with all the global investment banks. They don’t have any serious regulatory issues, but are all suffering from low interest rates as well as regulatory oversight issues, having to pull capital out of trading businesses. The great news is that while everybody else is reducing exposure to trading businesses, this bank is not. There is going to be, and already is, a lot less competition in those trading businesses that they run so well and so shrewdly. Trading at about 10X earnings, a slight discount to tangible BV. Dividend yield of 1.6%.