BlackRock reported a really nice quarter this morning, and it gave me perspective toward GS.
We all know GS is under attack by Washington (and its so hard to stay angry at Obama, watching him give his speech, he is just so freaken charismatic! :), but how much different is GS to BLK?
BLK has a forward PE of around 20, and they are an Asset Manager. GS has a forward PE of about 7 (not accounting for the reduced cash bonus payout to execs that will INCREASE their earnings power), and they are a 'bank holding' company at the moment.
Both companies are in the same line of businesses, except for a few areas. So why doesn't Goldman remove their 'Bank' status and return to an Investment Bank or be considered a Banana? (courtesy of Matt Simmons for the Banana reference... read an article to where he mentioned it :)
GS maybe waiting for the implications of changing their status, as Washington has not made clear yet what the regulation of the 'new' status would entail. Basically, 'stick with the devil you know' concept.
IMO, once there is clarity on the type of regulation for a status, GS will decide. My guess is that they will no longer have a bank status by the end of the year. And with the removal of that status, and greater clarity, GS will be trading at a higher multiple. (I would argue 10-13, if not higher.)
Once Wall Street understands this, GS stock will rise, and IMO, rise hard.
(I am not worried about the increased capital requirements that will be placed on trading, as I feel, this is very necessary within the industry. But GS already had very tight control as to how it trades, and I do not expect their model to significantly alter due to the increase requirements.)
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