This page has been archived and commenting is disabled.

A Few Quick Comments On Goldman's Q4 2011 Results

Reggie Middleton's picture




 

Notes of interest as I browse through the Goldman Q4-2011 earnings release...

  1. Many analysts dropped their estimates for Goldman (considerably after I warned on the firm), setting up the old Wall Street bait and switch move... Yet, despite this setup on reduced earnings, Goldman STILL MISSED on the top line! This is the most important number and has trended downward sharply.
  2. Goldman has padded earnings by slashing its compensation. For this I query my hyperintelligent BoomBustBloggers (and anyone else who has a synapse or two to spark), exactly what is that Goldman makes again? What's their prized formula? Their secret sauce? Their patented product? Oh yeah, they really don't have any thing of the sorts outside of their human capital - their employees. Those very same employees in which Goldman is not making a negative investment in order to make numbers (on earnings, they can't do anything about missing the top line). As a result, Goldman's only true product - their only real inventory, is heading for the hills. What does this bode for the future? Well, you guys are smart. You know its bullish when companies invest heavily for the future. What is it when they pare investment back significantly???
    1. The earnings pad is not even as optimistic as it seems. Revenues have decreased more than the effective reduction in compensation, thus it can be argued that effective comp as a % of revenues has increased. Should shareholders be excited about the proportion of their revenues increasing to compensate those who have underperformed so drastically???
  3. The net gain attributable to the impact of changes in the firm’s own credit spreads on borrowings for which the fair value option was elected was approximately $600 million for 2011.
    1. So, the firm's actual cash earnings decrease was materially higher than appears on the surface...
  4. During the year, the firm repurchased 47.0 million shares of its common stock at an average cost per share of $128.33, for a total cost of $6.04 billion, including 9.2 million shares during the fourth quarter at an average cost of $98.54, for a total cost of $908 million. The remaining share authorization under the firm’s existing repurchase program is 63.5 million shares.

    1. Goldman has taken a $1.3B loss on its share buybacks for 2011! Keep that in mind when taking their investment recommendations to heart!I've Told You Before, And I'll Tell You Again - Goldman Sachs Investment Advice Sucks!!! Even when they are advising themselves on share buybacks though???
  5. The MSM news organizations forgot to mention that althought Goldman's asset base is shrinking, it is shifting ever more of those shrinking (read devaluing) assets into the level three category.

image006_copy_copy

I will extend this note for subscribers if I find anything of interest in subsequent filings or the conference call notes.

Here are some links that you are unlikely to find anywhere else...

Just As I Predicted Last Quarter, The World's First FDIC Insured Hedge Fund Takes A Fat Trading Loss

I'm Hunting Big Game Today:The Squid On The Spear Tip, Part 1 & IntroductionI'm Hunting Big Game Today:The Squid On The Spear Tip, Part 1 & IntroductionI'm Hunting Big Game Today:The Squid On The Spear Tip, Part 1 & Introduction  

I'm Hunting Big Game Today: The Squid On A Spear Tip

Summary: This is the first in a series of articles to be released this weekend concerning Goldman Sachs, the Squid! In this introduction (for those who do not regularly follow me) I demonstrate how the market, the sell side, and most investors are missing one of the biggest bastions of risk in the US investment banking industry. I will also...

 Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?  

Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?

Welcome to part two of my series on Hunting the Squid, the overvaluation and under-appreciation of the risks that is Goldman Sachs. Since this highly analytical, but poignant diatribe covers a lot of material, it's imperative that those who have not done so review part 1 of this series, I'm Hunting Big Game Today:The Squid On The Spear Tip, Part...

Reggie Middleton Serves Up Fried Calamari From Raw Squid: Goldman Sachs and Market Perception of Real Risks!Reggie Middleton Serves Up Fried Calamari From Raw Squid: Goldman Sachs and Market Perception of Real Risks!Reggie Middleton Serves Up Fried Calamari From Raw Squid: Goldman Sachs and Market Perception of Real Risks!

Hunting the Squid Part 3: Reggie Middleton Serves Up Fried Calamari From Raw Squid

For those who don't subscribe to BoomBustblog, or haven't read I'm Hunting Big Game Today:The Squid On The Spear Tip, Part 1 & Introduction and Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?, not only have you missed out on some unique artwork, you've potentially missed out on 300%...

 Hunting the Squid, part 4: So, What Else Can Go Wrong With The Squid? Plenty!!!Hunting the Squid, part 4: So, What Else Can Go Wrong With The Squid? Plenty!!!Hunting the Squid, part 4: So, What Else Can Go Wrong With The Squid? Plenty!!!  

Hunting the Squid, part 4: So, What Else Can Go Wrong With Goldman Sachs? Plenty!

Yes, this more of the hardest hitting investment banking research available focusing on Goldman Sachs (the Squid), but before you go on, be sure you have read parts 1.2. and 3:  I'm Hunting Big Game Today:The Squid On A Spear Tip, Part 1 & Introduction Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To...

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 02/20/2012 - 05:32 | 2177009 Cara
Cara's picture

That's a great work. This will help a lot of administrators to protect their website by removing such links. Thanks for this interesting post.
leather coats for men
mens leather coats
leather trench coat
mens sport coats
long coat
ladies leather jackets

Sun, 01/22/2012 - 22:01 | 2087372 arg
arg's picture

Gabrielle pomegranate diet pills Giffords, who survived slim pomegranate a gunshot wound to the super slim head a year ago, said super slim diet pills Sunday she would step down super slim green lean body capsule from Congress this week, setting super slim pills off a political scramble in Arizona super slim pomegranate to fill her seat. In a super slim pomegranate diet pills video released on YouTube, the super slim pomegranate pills Democratic congresswoman said she would super slim pomegranate weight loss capsule resign because she had more work to do on her recovery.

Thu, 01/19/2012 - 23:09 | 2080194 hotkarlandthecl...
hotkarlandtheclevelandsteamers's picture

REGGIE GOOGLETON!!!!

Sat, 01/21/2012 - 18:41 | 2085089 Zero Govt
Zero Govt's picture

Now that is funny  ;)))

...would have been funnier if you'd waited for Reggies latest desperate episode of plugging the goons at Goofball and muck raking on the cool (and clean) as a cucumber Apple

Thu, 01/19/2012 - 23:00 | 2080181 luna_man
luna_man's picture

 

 

Good to know...Keep it coming!

Thu, 01/19/2012 - 19:58 | 2079743 Widowmaker
Widowmaker's picture

I miss Reggie pumping GOOG.

Enough said.

AAPL?  Longs will eat the Middleton buffet right off his plate.

Thu, 01/19/2012 - 23:37 | 2080234 covert
covert's picture

Goldman used to be a good firm, strange.
http://expose2.wordpress.com

Thu, 01/19/2012 - 21:09 | 2079944 monoloco
monoloco's picture

Another BoomBustBlog ad diguised as a zerohedge article.

Thu, 01/19/2012 - 17:21 | 2079290 MountainMan
MountainMan's picture

Martin Armstrong predicted that GS would go off the cliff sometime after 2015.

Sat, 01/21/2012 - 18:49 | 2085099 Zero Govt
Zero Govt's picture

surely must be earlier than that ...when Europe implodes, Goldman Sucks is a train wreck.. even Blowjob Benny's hyperventilating techniques in the ambulance will leave them DOA (unless he can blow a $100 Trillion derivatives bubble!)

Thu, 01/19/2012 - 16:46 | 2079171 Northeaster
Northeaster's picture

From the GS Proxy filing:

http://www.sec.gov/Archives/edgar/data/886982/000119312512016380/d277726...

"Holders of Normal APEX may elect to exchange their Normal APEX for Stripped APEX and Capital APEX in the event of a successful Remarketing and Holders of Capital APEX may elect to dispose of their Capital APEX in the event of a successful Remarketing,"

I'm not finance, but my question would be: What if this is NOT successful? Are they trying to hose their own clients yet again?

Back to topic, I can't find the SEC filing, and where the heck would the level 3 data be?

Thu, 01/19/2012 - 15:44 | 2078918 Zero Govt
Zero Govt's picture

Goldman Sucks "padding earnings" ? ...perish the thought!

These bankers books are straight and true. Their Auditors, rsk officers, Non-Exec Director Board would be 'on it' like rats up a drain if not a single figure, from profits to assets, were not a true and fair representation to investors, public, the US Govt and Regulatory authorities.

Er, wouldn't they?!!

It's not like Lloyd Blankfien and Jamie Dimon are slippery little s**ts trying to pull the wool over peoples eyes that they're really bankrupts... how could they possibly get it past all those eagle-eyed authorities (worthless corrupt crones) anyway

Thu, 01/19/2012 - 15:26 | 2078861 BinAround
BinAround's picture

They're not going bankrupt, they have lots of capital, the are cheap since market price is 14% below tangible book value, and almost every bank on the planet is rising with violence and volume.  Capital markets are cyclical, and we've just had three shitty quarters.  If investors start to think that housing has bottomed, and why not given all time cheap affordability, then you have a stampede of underweight investors rushing in.  Look at the charts for housing related stocks - I hope you are not short. 

Thu, 01/19/2012 - 15:48 | 2078940 fonestar
fonestar's picture

Housing is for chumps and yuppies.  I would short the shit out of that market but with silver so cheap I don't want to get distracted.

Thu, 01/19/2012 - 15:19 | 2078827 nowhereman
nowhereman's picture

Of course profits are down, it's an election year, and buying a government is an expensive proposition.  Wait 'til next year, things will be much better for the squid, they'll have their men in place.

Thu, 01/19/2012 - 14:55 | 2078697 BennyBoy
BennyBoy's picture

The only product GS has to sell is connections.

Thu, 01/19/2012 - 13:53 | 2078460 Jolly.Roger
Jolly.Roger's picture

Good points as usual

When will they collapse though?

A year from now?

Ten years?


Thu, 01/19/2012 - 13:45 | 2078429 disabledvet
disabledvet's picture

They're on both sides of the trade. As such "they have information." and yes "they use their power to extort" to do just that. Obviously one has to be careful of both the who and what in said...ahem..."enterprise." that 1000 foot long upside cruise ship stood out to me..."in Italian waters with lots of Italians on board" I might add. That strikes me as..."government business." not that anyone would ever be so insanely stupid and try and blow up a country of course! Anywho..."fear of Bain" seems to be all the rage these days. Who knew? Mormons!

Thu, 01/19/2012 - 13:21 | 2078301 falak pema
falak pema's picture

RM : you're up against the heart of the system. In our day and age the system cheats outrageously, as its totally hubristic and self fulfilling. Before GS falls, the system has to throw in the towel. It won't to that voluntarily; only under duress. Whether it comes from the market, a black swan event or through inertia/incompetence, the road to that iconic event will be long and bumpy. This is the financial praetorian guard of PAx Americana construct. They ARE the voice of uber alles USA. 

Do NOT follow this link or you will be banned from the site!