Thursday, October 30, 2008

Goldman very weak again

GS is trading down almost 8% today to 90 a share. The stock is dramatically underperforming the S&P 500 over the last 5 trading days. I am hearing nothing specific to account for GS weakness. But, November quarter end numbers look way too high - consensus is 2.50 down 41 cents in the last 4 weeks from 2.91. I have a pretty strong suspicion that GS could have lost money in September and October. I am skeptical they can make current consensus estimates even if there is a remarkable recovery in the markets and FICC trading flows pick up dramatically in November. The biggest risk in the near-term is that estimates come down more sharply. I don't have a position in GS shares because it is difficult to determine if below consensus earnings are already discounted in the stock. That said, I don't think GS shareholders are prepared for a loss.

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