Tuesday, May 11, 2010

GS: Cash for the sake of cash


Even if the $375B in debt is subtracted from Total Cash, GS still has about $700 a share in cash. But why subtract the debt from Total Cash, when GS can package it and sell it to the government. So let's go with the $1,395.42 per share as Total Cash.  I guess they need all of that cash to service their generous 1.00% annual dividend to common shareholders. 

A shining example of capitalism at its finest, or, a travesty of greed and corruption?


6 comments:

khalid said...

I trust you've read Kuhn's Structure.
The following is germane to what is happening/will happen? I feel maybe GS has to keep this in mind?
"Political revolutions aim to change political institutions in ways that those institutions themselves prohibit. Their success therefore necessitates the partial relinquishment of one set of institutions in favor of another, and in the interim, society is not fully governed by institutions at all. Initially it is crisis alone that attenuates the role of political institutions as we have already seen it attenuate the role of paradigms. In increasing numbers individuals become increasingly estranged from political life and behave more and more eccentrically within it. Then, as the crisis deepens, many of these individuals commit themselves to some concrete proposal for the reconstruction of society in a new institutional framework. At that point the society is divided into competing camps or parties, one seeking to defend the old institutional constellation, the other seeking to institute some new one. And, once that polarization has occurred, political recourse fails. Because they differ about the institutional matrix within which political change is to be achieved and evaluated, because they acknowledge no supra-institutional framework for the adjudication of revolutionary difference, the parties to a revolutionary conflict must finally resort to the techniques of mass persuasion, often including force. Though revolutions have had a vital role in the evolution of political institutions, that role depends upon their being partially extrapolitical or extrainstitutional events."

Anonymous said...

No, they need all that cash to meet federal capital requirements. At its core, GS is a banking and investment firm.

Capital needs for such firms are substantial. When capital reserves dive... well, we saw what happened in the fall of 2008.

Capital requirements are risk-weighted, so a spike in cash is not necessarily a good thing.

Another example... Citigroup is selling for $4 per share, but has $26 of cash per share on the books.

That in itself does not make Citigroup a great buy.

Allan said...

I hear you on fed capital requirements, but that would render the yahoo key statistics accurate, but misleading. glad I didn't buy a million shares of gs today......

Al said...

So, given that GS's behavious is ethically criminal, or possibly literally criminal, but that they are still a "protected" profit machine, is it fooling to consider buying them when the trend turns?

Anonymous said...

Khalid,

That quote sounds like my internal being's personal life story. Holy Crap!

ilene said...

Allan, I looked at the balance sheet of GS (on Yahoo) also and I don't see how that 1400/share was derived.

These numbers look wrong.

Total Cash (mrq): 751.57B
Total Cash Per Share (mrq): 1,395.42

Price to book looks more accurate:
Price/Book (mrq): 1.21

Assets under management without subtracting liabilities wouldn't be equivalent to "cash" would it? Anyway, the numbers at yahoo don't match the numbers reported to the sec, unless I'm missing something.