Monday, April 13, 2009

Goldman Releases Earnings Early, To Raise $5 Billion

EPS: $3.23/share due primarily to Fixed Income, Currency and Commodities which generated record quarterly net revenues of $6.56 billion, 34% higher than its previous record, more than double the first quarter of 2008, "reflecting strength across most businesses, including record results in interest rate products and commodities." Wonder if GS' AIG CDS unwind trades falls into this group (never mind, that is rhetorical).

And of course GS will raise $5 billion in new capital which together with other existing cash will be used to redeem all the TARP obligations. The underwriter on the offering? Goldman Sachs.
The Goldman Sachs Group, Inc. (NYSE: GS) announced today that it has commenced a public offering of $5 billion of its common stock for sale to the public. Goldman, Sachs & Co. will serve as the sole underwriter for the transaction. The underwriter will have a 30-day option to purchase up to an additional 15% of the offered amount of common stock from the company to cover over-allotments, if any.

After the completion of the stress assessment, if permitted by our supervisors and if supported by the results of the stress assessment, Goldman Sachs would like to use the capital raised plus additional resources to redeem all of the TARP capital.
Also, as readers point, a very curious spike in interest rate VaR.


Also, did Goldman just report a 4 month quarter period?



Has the whole word gone crazy?
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34 comments:

Anonymous said...

I'm not impressed. FICC saved them; equities, asset mgmt, and i-banking revs were all down hard.

Their whole "don't worry we'll make it up on 'volume'" thesis does not look like it's working anywhere other than FICC.

We'll see...

Ian said...

Interest rate VAR doubles

Anonymous said...

Ian, yes, y-o-y. Lotta risk there.

TPC said...

It's only a matter of time before investors begin to catch on to this clever plan. Manipulate accounting rules, funnel income via AIG, blow out earnings expectations, raise capital, come back to the taxpayer in Q3 for more capital when the sh*t hits the fan again.

To Timmy's credit, this has been a very clever little manipulation of the market. Borderline brilliant. Investors will slurp up at $5 equity offering like it is vintage wine.

Me, I am waiting until this bank earnings fraud ends to I can short the living hell out of these pigs.

Anonymous said...

Yep, FICC should be renamed AIG conduit for this Q. Its great to be "insured" by fools/taxpayers.

Shawn said...

Tyler, not sure why you are concerned with SPY volume at all. It's just an ETF.

If you want to talk technicals, look at the real SPX volume. It ain't small compared to SPY.

SPX should be the benchmark, while SPY resembles more of options trading.

http://stockcharts.com/h-sc/ui?s=spx

S said...

FICC is breathtaking. They "claim" $800M of marks (note the footnote - before hedges)!

"During the quarter, credit products included losses from corporate debt and private equity investments, and mortgages included a loss of approximately $800 million (excluding hedges) on commercial mortgage loans and securities. In the first quarter of 2008, credit products included a loss of approximately $1 billion, net of hedges, related to non-investment-grade credit origination activities, and mortgages included a net loss of approximately $1 billion on residential mortgage loans and securities"

Also note that they lost $2.25 in the 1 month of december for the stub quarter.

All other businesses were weak except debt underwirting complimnenbts of the FDIC backed debt and admitedly HG issuance.

Anonymous said...

Tyler - with interest rate VaR doubling, do you think this provides any additional evidence that they may be extraordinarily "plugged in" to the actions at Treasury? Interesting to note that VaR is down significantly in equities, which are less controllable than interest rates....

Anonymous said...

Tyler - obvious point but FICC major gains should be no surprise given the massive off-the-run AIG CDO unwinds...don't see that as antything other than one-off...ask the GS boys how their basis trades are working out? and for those who are so inclined - consider GS Level 3 asset changes...nuf said!

Anonymous said...

TPC,

When do you see the end to this. Lot of chatter I'm hearing says OPEX this month should be the beginning of a long trip down...

GlobalMacroSpeculator said...

GS is massively overvalued here. earnings power is just not there

Sam said...

So f*ckin' rigged! Before the last earnings, the news was leaked to WSJ to convienently "prep" the market for the $2b in losses. This time, again, the WSJ had a piece out and rumors were floating around of a $12b quarter. Set them up nicely for the equity offering, didn't it?

~$5b in compensation in this ecomonmy!!? All I can say is WOW..

Anonymous said...

I don't see how anyone expects there to be a bank earnings fraud case when the #1 perpetrator of the fraud is the government. Are you gonna take it to the International Criminal Court? It's kind of ridiculous. No one is above the law...except the lawmakers.

TPC said...

Anonymous,

I'm now thinking that the market could remain buoyant for the remainder of April. The problem is that the banks announce earnings for the next 2 weeks and no one in their right mind wants to get short in front of that. I still think we're likely to see "better than expected" earnings from the majority of the banks. Then we'll get an announcement on the Stress Tests at the end of the month. I wouldn't be shocked if that announcement is one of these grand Sunday evening events where the Fed and Treasury declare that they have saved the world again. 5% market pop off that and then we're all set for the greatest "sell in May and go away" that the market has ever seen. These banks are not healthy and the economy is not rebounding. I am certain of both.

Personally, I am not getting short in front of these BS bank earnings. It's just too risky. Until then I can afford to be patient. If the market melts up further then it will only tee up my short positions better.

Anonymous said...

tyler
I heard that this GS 1st Q included 4 month because they changed Q ending from Feb to Mar.

Anonymous said...

tyler
I heard that this GS 1st Q included 4 month because they changed Q ending from Feb to Mar.

Anonymous said...

Thanks TPC, I'm in SRS but unloaded most sds today.

Anonymous said...

There was a lot of corporate bond issuance recently... don't you think that might have a big impact on the interest rate VaR? I'm guessing there was a LOT more new issuance than in Q108.

Anonymous said...

No one has yest ask the ULTRA important question yet:

"Why did GS release early?"

Anonymous said...

where did 'yest' come from, LoL. I dunno...

TraderMark said...

Somehow they managed to earn more NOW than in the Q before Bear Stearns imploded? Because clearly capital markets last quarter were superior to the now seemingly benign period pre TARP, TALF, AIG, BSC, Fed Fed Fed, TLGF, FASB changes, blah blah.

http://www.fundmymutualfund.com/2009/04/goldman-sachs-gs-pre-announces-14-hours.html

Anonymous said...

Look carefully at the release. It was still a 3-month quarter (Jan-Mar), and then December was a separate 1-month period.

http://www2.goldmansachs.com/our-firm/press/press-releases/current/pdfs/2009-q1-earnings.pdf

They reported +$3.39 for Jan to Mar, -$2.15 for Dec for a total of $1.24!

"The company said it earned $1.81 billion, or $3.39 a share, in the first quarter"

"December Loss

The company, which changed its fiscal year to end in December instead of November, also reported results for the month of December today. They showed the bank lost $780 million, or $2.15 per share, as losses in fixed-income trading and principal investments overwhelmed revenue from other units.

Anonymous said...

so the street is basing their $1.64 est. off the Jan-Mar? or the 4-month stub? thanks

Anonymous said...

What was the consensus estimate for the December stub? Since that wasn't previously announced, I assume there was an estimate?

Can't wait to read the analyst reports on this one.

Anonymous said...

Financial innovations in every chance you got in Goldman Sachs. That really sucks!

Change of accounting reporting period results in a quarter with 4 months, then goldman sachs shall reporting it accordingly. Now how can one compare the one month (December 2008) results with any other information? the loss of December 2008 which was equivalent to 3/4 of the 3 months reported earnings was vaporized from the crime scene? What a financial innovationn of manipulation and misinformation.

Anonymous said...

Is it normal for them to underwrite themselves?

How bad is the impact of dilluting the shares to another $5B offering, when more than half is owned (70%?) by the institution?

Anonymous said...

zero hedge and the "negativity blog bubble" are on their way out.

two months ago blogs like this were trumping up any and every statistic as if it were, literally, the deathknell for the entire industry.

just goes to show...the negativity blogsphere will do nothing but tell you things you want to hear...but don't expect to make money doing that.

Anonymous said...

these account statements are not showing much of the assets at level 3 (92 billion usd) level 2 ?
If one wants to invest on this pro forma good luck
For the interest rates leverage see the OOCC report 5 billion usd will not help

Anonymous said...

and btw, regurgitating and spinning stats to fit the mold of some permanently negative bias is an awful way of determining value. that's why negativity blogs are worthless. extrapolating negativity into perpetuity is a great way to get your head handed to you.

Anonymous said...

"Also, did Goldman just report a 4 month quarter period?"

go to page 10 of the document you cut and pasted from to find the dec. month data.

the dec. month data was also disclosed in the 10-k so its not new information. but this is, yet again, the negativity blogsphere spinning things to sound worse than they really are...for the sake of generating traffic.

Quantum Bear said...

I love Goldman's reported 2008 tax rate: "approximately 1%". (page 3 of their report). Is the US taxpayer this dumb?

Anonymous said...

(love it.)

This isn't 'nam. There are rules!

kushyma said...

FICC made $6.6 net, add back $1.8bln in write downs that is $8.4 bln net. VAR for FICC was around $300mm which means they would have to made money at their VAR for 28 of the 60 odd trading days and scratched on the other days...

David said...

Why hasn't one person noticed the connection with Goldman announcing its numbers early,which they never do. It is clear that the false rumor of share dilution which tanked the stock, originated with Goldman traders, allowing the CEO to make a sudden change. It was patently obvious that Goldman traders profited hugely from this felony!This is an act of outright thievery. To suddenly change the release date of a scheduled earnings report should be a serious matter reported upon in blogs and the media. With this outrageous and transparent criminal act, it is time for people to go to jail at Goldman Sachs!