Sunday, May 02, 2010
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Goldman Sachs (GS)
Andrew Mellon and Goldman Sachs
Richard X. Bove
Andrew Mellon was the longest serving Treasury Secretary in the historyof the United States. He held the position almost 11 years through theHarding, Coolidge, and part of the Hoover Administrations. He was alsoreputed at one point to be richer than Rockefeller, Carnegie, or HenryFord.He helped found and he owned meaningful positions in Gulf Oil, Alcoa(AA/$13.43/NR), Carborundum, the Mellon National Bank, andnumerous other enterprises. He owned a significant amount of realestate across the nation.In 1933, President Franklin D. Roosevelt decided to make Mellon theobject of his campaign against crooked industrialists
industrialists whocaused the Depression. Therefore, against the advice of the IRS, theAttorney General of the time, and a grand jury that refused to indictMellon, he demanded that the Department of Justice pursue a taxevasion case against Secretary Mellon.Homer Cumming, the Attorney General, then issued the following
financial crimes which have been committed in highplaces growing out of banking irregularities
…” required the Department
of Justice to pursue a tax evasion case against Andrew Mellon.Thus, against all knowledgeable advice the President pursued Mellon.He pursued him even after Mellon donated his extensive art collection tothe nation to create what is now the National Gallery of Art. Hecontinued to pursue Mellon even after the industrialist died. He wasforced to stop his pursuit only when the court system exoneratedMellon.It has been suggested that President Roosevelt felt no animosity towardSecretary Mellon. He even met with Mellon in the Oval Office near the
end of Mellon’s life to discuss the National Gallery of Art. The
Presidentattacked and kept attacking Secretary Mellon even after Mellon diedbecause he needed a symbol of industrial evil that had to be eliminatedfrom the system. Secretary Mellon was that symbol.It appears that President Obama needs a symbol of financial evil thatmust be expunged from the system. That symbol is Goldman Sachs.
Note: The tables in this report have been prepared by Rochdale Securities from sources believedto be accurate. However, accuracy cannot be guaranteed.
2009 2010 2011 2012Mar $3.39 $5.59 $5.37 $5.63Jun $4.93 $4.24 $5.48 $5.75Sep $5.25 $3.91 $5.27 $5.55Dec $8.20 $4.99 $4.65 $5.13Year $22.16 $18.72 $20.77 $22.06Previous $22.16 $18.04 $20.12 $22.23Consensus $22.16 $19.46 $20.66 $21.87P/E Multiple 6.6x 7.8x 7.0x 6.6x
Rating Buy BuyTarget Price $200.00 $200.00 Normalized Earnings $23.00 $23.00
Stock Data (03/10)
Current Price $145.2052 Week Low/High $119.34 $193.60Est. 2010 Earnings Per Share $18.72 7.8xEst. 2010 Rev per share/P:RPS $80.50 1.80xBook Value/Price:Book $111.84 1.30xTangible BV/Price:TBV $101.70 1.43xDividend/Yield $1.40 1.0%Shares Out/Mkt. Cap (mil) 590 $85,668
Income Statement (mil)/ Percent of Revenue (03/10)
Principal Transactions $9,195 72.0%Investment Banking $1,184 9.3%Investment Management $978 7.7% Net Interest Income $1,418 11.1%Operating Revenues $12,775 100.0%Personnel Costs $5,493 43.0%All Other Expenses $2,123 16.6%Pretax Income $5,159 40.4%
Balance Sheet (mil)/Percent of Assets (03/10)
Cash $ %Segregated cash & securities $ %Fed Funds & Repos $ %Securities Borrowed $ %Receivables $ %Trading assets $ %Other $ %Assets $881,000 %Deposits $ %Collateralized Borrowings $ %Payables $ %Trading Liabilities $ %Borrowings $ %Other Liabilities $ %Long Term Debt $180,410 20.5%Preferred Stock $6,957 0.8%Common Equity $65,987 7.5%Tangible Common Equity $60,004 6.8%
Key Ratios (03/10)
3-Year RPS CAGR 0.2%3-Year EPS CAGR 4.4%Tier One Common 12.4%Return on Equity 21.0%Return on Assets 0.39%
Source: Trade Station