WSJ: Goldman Sachs may post $2 billion loss

2007 GS investors in their hedge funds took a beating:

BSD said:

"Goldman Sachs leads hedge fund stragglers

William Hutchings
07 Jan 2008

Goldman Sachs’ flagship Global Alpha fund recorded the biggest loss of almost any hedge fund last year as the industry struggled to match the double-digit returns of 2006.

The Global Alpha fund, which started last year with $10bn (€6.8bn), made an estimated loss of 39%, according to an investor in hedge funds, who has seen its initial results for December."

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Now it's the shareholders turn:

"Goldman may post $2 billion loss

Firm likely to report quarterly loss of $5 a share, according to Wall Street Journal.

"One area that is thought to have given Goldman particular problems in the just-ended quarter is its "book" of so-called distressed investments. Over the years, Goldman has invested in everything from troubled auto loans in Thailand to the debt of a liquor maker in South Korea to struggling golf courses in Japan. This business was once a big profit center."

I spent a day on their floor in NY with the fixed income guys in March; they seemed to be very optimistic about the future, even the guys who had the task of selling CDOs... I hope Goldman come through OK, I've always liked them as a company and the guys in NY looked after me very well. About a billion times better than the guys at Bear did anyway... then again I did go there the day after their losses were revealed to the world...

Skill Leverage said:

Ithen again I did go there the day after their losses were revealed to the world...

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Oh la-la I bet that was some day to go drop by !!!

BSD said:

Oh la-la I bet that was some day to go drop by !!!

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It was one of the single most awkward days of my life - they placed me in an office by myself, and I watched through the glass as everyone either ran around like headless chickens, or slumped in their seats staring into nothing. The VP who I was visiting had just let go of 2/3 his team that very morning, and would pop in occasionally for 5 minutes to chat with me before some nervous-looking analyst came knocking on the door and off he ran again.... The Goldman guys were like a frat house, albeit an incredibly intelligent, hard-working frat house... everyone I spoke to went to MIT it seemed. It was by far the most stupid I have ever felt , but they were all very friendly and took time to explain what they were doing, and why.

You definitely need a scarf to cover your face on Wall Street though - the wind coming off the water is the coldest thing I have ever felt, I got in the building and my lips nearly dropped off...!

SL

The Beginning of the end

This could be the beginning of the end. Notice this announcement came out 1 day after they confirmed their paperwork to become a bank. The FDIC is much stricter than the SEC with regulations. I know they needed to become a bank to get the cash, but this could be the beginning of the end for some investment brokerages. Their first loss since coming public - wow.

Michael

BSD said:

2007 GS investors in their hedge funds took a beating:


Now it's the shareholders turn:

"Goldman may post $2 billion loss

Firm likely to report quarterly loss of $5 a share, according to Wall Street Journal.

"One area that is thought to have given Goldman particular problems in the just-ended quarter is its "book" of so-called distressed investments. Over the years, Goldman has invested in everything from troubled auto loans in Thailand to the debt of a liquor maker in South Korea to struggling golf courses in Japan. This business was once a big profit center."

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