Whitney Sees GS Support in $120s

Monday, April 26, 2010

The Dow gained a point today, actually less than a point, after being up 50 points early in the day. A pretty uneventful day but rather frustrating for anyone trying to extract gains intraday actively. Goldman Sachs (GS) continued to feel selling pressure dropping another 5 points today (-3.4%) ahead of tomorrow's testimony by CEO, Lloyd Blankfein on Capital Hill.

Meredith Whitney appeared on CNBC's Closing Bell with Maria Bartiromo today and had some interesting thoughts on Goldman Sachs:
Maria: "Do I want to sell shares in Goldman Sachs if I'm an investor right now?"

Meredith: "I think Goldman's support is right at book value which is in the $120s. It's a good franchise and they'll continue to do well. People never assume that they're going to make money. If they make a low-teens ROE, that's twice what the banks are making. That's stil a pretty good return. But, it's going to very difficult for them to catch momentum. Since last summer when the stock did so well, there hasn't been momentum around any of the businesses and so I think the momentum has clearly been taken away from Goldman."
Very interesting stuff from Whitney. She suggests that GS shares will be worth looking at with another 20% haircut bringing them down to book value. And, I assume she would say investors will need to have patience in order to see the possibility of out-sized returns given the "lack of momentum" surrounding their primary businesses.

Republicans successfully filibustered the banking reform bill in the Senate today. Ahh, politics.
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