Morning Coffee: Don't Panic, Potter is Buying!
(Stocks in this article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: MER, NYSE: C, NYSE: GS, NYSE: MS, NYSE: GE, NYSE: URI, NYSE: WYE, Nasdaq: TEVA, NYSE: CVX, NYSE: GS, Nasdaq: MAXJ)
"Potter is buying!" exclaimed Jimmy Stewart in It's a Wonderful Life. Goldman Sachs (NYSE: GS) isn't selling either, Goldman is buying, buying up Cheyne Finance, the marquee troubled SIV portfolio. Leading a group of investors, clearly Goldman is once again on the right side of a deal, gobbling up bargains just like Potter. Wall Street Greek believes this is the most important news of the day, and offers further hope for the troubled credit markets and financial system. It also provides a louder buy signal, in our opinion, for investment banks on the cheap. It looks to me like the nonbinding agreement hinges on the investors' ability to negotiate reinvestment opportunities for the creditors of the company. Goldman is looking bright, as usual, as it does not even seem to own yet what it would turnover for profit, if I understand correctly.
Jim Cramer spoke wisely when, last week, he announced Goldman Sachs is a buy. While my only concern is the timing, and possibility of profit taking in early '08, I have to agree the investment banks on the whole look attractive. Jim said Goldman would benefit most from the coming new capital wave driven by sovereign funds. In an important announcement, Saudi Arabia just indicated it would be creating a sovereign wealth fund that could have more than $900 billion to invest. With its neighbors in the Middle East looking to international investment, it appears a competitive nerve has been engaged in Saudi Arabia. The Saudi coffers have been operating under a mandate to invest locally, while other Saudi institutions, individuals and the royal family have not limited themselves in this manner. Also, there's an important benefit to diversification outside the politically strained region that the Saudi's and others cannot ignore.
While Cramer may be right on the valuation of Goldman not being rich versus peers, based on analysts' estimates, the fact remains that some profits could be had from the stock in early '08 and placed into other beaten down shares of GS's rivals like Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C). We are shy about touching Citi, with the dividend still at risk, but Citi should clearly be a beneficiary of Saudi investment, considering Saudi royal ownership interest in the firm. In any event, this looks like an interesting sector to consider for '08. The market closes at 1 p.m. today.
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"Potter is buying!" exclaimed Jimmy Stewart in It's a Wonderful Life. Goldman Sachs (NYSE: GS) isn't selling either, Goldman is buying, buying up Cheyne Finance, the marquee troubled SIV portfolio. Leading a group of investors, clearly Goldman is once again on the right side of a deal, gobbling up bargains just like Potter. Wall Street Greek believes this is the most important news of the day, and offers further hope for the troubled credit markets and financial system. It also provides a louder buy signal, in our opinion, for investment banks on the cheap. It looks to me like the nonbinding agreement hinges on the investors' ability to negotiate reinvestment opportunities for the creditors of the company. Goldman is looking bright, as usual, as it does not even seem to own yet what it would turnover for profit, if I understand correctly.
Jim Cramer spoke wisely when, last week, he announced Goldman Sachs is a buy. While my only concern is the timing, and possibility of profit taking in early '08, I have to agree the investment banks on the whole look attractive. Jim said Goldman would benefit most from the coming new capital wave driven by sovereign funds. In an important announcement, Saudi Arabia just indicated it would be creating a sovereign wealth fund that could have more than $900 billion to invest. With its neighbors in the Middle East looking to international investment, it appears a competitive nerve has been engaged in Saudi Arabia. The Saudi coffers have been operating under a mandate to invest locally, while other Saudi institutions, individuals and the royal family have not limited themselves in this manner. Also, there's an important benefit to diversification outside the politically strained region that the Saudi's and others cannot ignore.
While Cramer may be right on the valuation of Goldman not being rich versus peers, based on analysts' estimates, the fact remains that some profits could be had from the stock in early '08 and placed into other beaten down shares of GS's rivals like Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C). We are shy about touching Citi, with the dividend still at risk, but Citi should clearly be a beneficiary of Saudi investment, considering Saudi royal ownership interest in the firm. In any event, this looks like an interesting sector to consider for '08. The market closes at 1 p.m. today.
Receive Wall Street Greek FREE via email by subscribing here. (disclosure)
posted by The Greek | 10:54 AM
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