Why am I selling? GS took me by suprise today by having a larger quarterly drop than expected. GS’s institutional clients traded less and the backlog of investment-banking transactions shrank. Yes they still have a backlog, but the trend is not good. Fourth-quarter revenue declined to $8.64 billion from the prior year’s $9.62 billion. Profit-per-common share was $3.79 compared with $8.20 in the final three months of 2009.
I think it is time to take a little GS off the table after such a nice run up on the stock. I will put a buy back in at $155.
In the long run, I am bullish on GS and agree with Credit Suisse’s target price of $190. In the short run, I don’t consider GS an ‘outperform’ as CS does. I think GS is due for a pull back and I look to pickup some shares in the next three to six months at my target buy price.
If GS ever hits $190 I will either sell my remaining shares or half of my holdings, if I bought more.
Why I like GS:
Goldman Sachs is a best of breed franchise with a strong balance sheet and an ability to gain market share against its piers. GS has a myriad of businesses that include investment banking and institutional clients.