DOCSLIB.ORG

Strategic Report for Goldman Sachs Group, Inc

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Strategic Report for Goldman Sachs Group, Inc Strategic Report for Goldman Sachs Group, Inc. Tom Church Meredyth Lacy Cameron Taylor April 22, 2009 Goldman Sachs Group, Inc. Table of Contents EXECUTIVE SUMMARY .......................................................................................................................... 3 COMPANY OVERVIEW............................................................................................................................ 4 COMPANY HISTORY.................................................................................................................................... 4 BUSINESS OVERVIEW ................................................................................................................................. 8 Investment Banking............................................................................................................................... 8 Trading and Principal Investments....................................................................................................... 8 Asset Management and Securities Services .......................................................................................... 9 COMPETITIVE ANALYSIS .................................................................................................................... 10 RIVALRY .................................................................................................................................................. 10 Investment Banking............................................................................................................................. 10 Trading and Principal Investments..................................................................................................... 10 Asset Management and Securities Services ........................................................................................ 10 BUYER POWER.......................................................................................................................................... 11 SUPPLIER POWER ...................................................................................................................................... 11 BARRIERS TO ENTRY ................................................................................................................................12 Investment Banking............................................................................................................................. 12 Trading and Principal Investments..................................................................................................... 12 Asset Management and Securities Services ........................................................................................ 13 SUBSTITUTES............................................................................................................................................ 13 Investment Banking............................................................................................................................. 13 Trading and Principal Investments..................................................................................................... 14 Asset Management and Securities Services ........................................................................................ 14 COMPLEMENTS......................................................................................................................................... 14 SWOT.......................................................................................................................................................... 15 STRENGTHS .............................................................................................................................................. 15 WEAKNESSES ........................................................................................................................................... 18 OPPORTUNITIES ........................................................................................................................................ 18 THREATS .................................................................................................................................................. 19 FINANCIAL ANALYSIS .......................................................................................................................... 20 OVERVIEW................................................................................................................................................ 20 PROFITABILITY AND GROWTH .................................................................................................................. 21 SOLVENCY................................................................................................................................................ 22 LIQUIDITY ................................................................................................................................................ 25 STRATEGIC RECOMMENDATIONS................................................................................................... 26 LEVERAGE................................................................................................................................................ 26 REGULATION ............................................................................................................................................ 28 Troubled Asset Relief Program - TARP.............................................................................................. 28 Term Asset-Backed Securities Loan Facility - TALF.......................................................................... 28 Temporary Liquidity Guarantee Program – TLGP ............................................................................ 28 COMPENSATION........................................................................................................................................ 30 POTENTIAL FOR GROWTH......................................................................................................................... 33 Brazil – Banco Pactual ....................................................................................................................... 33 Eastern Europe – UniCredit Group.................................................................................................... 34 ENDNOTES................................................................................................................................................ 37 April 22, 2009 Page 2 Goldman Sachs Group, Inc. Executive Summary Goldman Sachs Group, Inc. (“GS,” “Goldman Sachs,” “Goldman,” or “the firm”) is arguably the world’s leading financial services institution. The firm has best-in-class operations in its investment banking, trading and principal investments, and asset management and securities services divisions. The current financial crisis has created a difficult environment for all investment banks, including Goldman Sachs, whose profitability slumped in fiscal year 2008 before rebounding in Q1 2009. Despite the crisis, however, the firm has continued to outperform its peers, further validating its reputation for superior risk management. Goldman’s relative success notwithstanding, the investment banking industry is undergoing a period of deep self-evaluation, and structural fundamental shifts may be underway. Questions raised include: • Leverage: Macroeconomic headwinds and investor uncertainty have necessitated rapid deleveraging across the industry, which raises broad questions about the sustainable future level of leverage for investment banks. • Regulatory reform: Government capital injections into large financial institutions are accompanied by the prospect of extensive regulatory reform. Public fury over financial institutions deemed “too big to fail” is at a fever pitch. For systemically important institutions, the government may make specific demands. More generally, legislative and regulatory changes may undermine the current business models of the largest investment banks. • Compensation: Mainstream opinion has accepted that compensation at least partially caused the type of risk-taking that led to the financial crisis. The question now becomes whether public firms will be allowed to make their own reforms or if the government will legislate compensation change. At stake is the very human capital which makes the large investment banks valuable. • Competitive landscape: The elimination of weaker firms has left a vacuum. The business model of the large investment banks will compete with the boutique model over that market share. Goldman is better-positioned to weather the storm than most or all of its peers. The firm must decide where aggression is appropriate and where caution is the optimal strategy. April 22, 2009 Page 3 Goldman Sachs Group, Inc. Company Overview Company History The long history of Goldman Sachs Group dates back to 1869, when German immigrant Marcus Goldman moved to New York and began buying customers' promissory notes from jewelers to resell to banks for a profit. Goldman's son-in-law, Samuel Sachs, joined the business in 1882, followed by Goldman's son Henry and son-in-law Ludwig Dreyfus in 1885. That year, the firm became a general partnership as Goldman, Sachs & Co. In 1887, Goldman Sachs formed a relationship with the British merchant bank Kleinwort Sons and began offering US-UK foreign exchange and currency services. Having established a presence in the northeast, the firm expanded its operations
Load more

Recommended publications
  • MONDELĒZ INTERNATIONAL, INC. (Exact Name of Registrant As Specified in Its Charter)
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 9, 2018 MONDELĒZ INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Virginia 1-16483 52-2284372 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) Three Parkway North, Deerfield, Illinois 60015 (Address of principal executive offices, including zip code) (847) 943-4000 (Registrant’s telephone number, including area code) Not Applicable (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
    [Show full text]
  • Hyatt Hotels Corp
    HYATT HOTELS CORP FORM DEF 14A (Proxy Statement (definitive)) Filed 04/07/15 for the Period Ending 05/13/15 Address 71 SOUTH WACKER DRIVE 12TH FLOOR CHICAGO, IL 60606 Telephone (312) 750-1234 CIK 0001468174 Symbol H SIC Code 7011 - Hotels and Motels Industry Hotels & Motels Sector Services Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2015, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A (Rule 14a-101) Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant Filed by a Party other than the Registrant Check the appropriate box: Preliminary Proxy Statement Confidential, For Use of the Commission Only (as permitted by Rule 14a -6(e)(2)) Definitive Proxy Statement Definitive Additional Materials Soliciting Material Pursuant to §240.14a -12 Hyatt Hotels Corporation (Name of Registrant as Specified in Its Charter) (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): No fee required. Fee computed on table below per Exchange Act Rules 14a -6(i) (1) and 0 -11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: Fee paid previously with preliminary materials: Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
    [Show full text]
  • Goldman Sachs: Reputation and Regulatory Risk
    Reputation resilience Goldman Sachs: reputation and regulatory risk processes that govern ethical behaviour, Goldman Sachs has been clear for innovation, quality, safety sustainability and many years that its reputation is a security. In accounting jargon, these key corporate asset. But recent business processes comprise the intangible assets that speak for 70% of the market events have shown that having such value of the average traded company. awareness is not always enough Reputation drives intangible asset value. Reputation-relevant intangible assets impact By Nir Kossovsky on corporate financials in several ways. By affecting customers, they impact on pricing The probability that a CEO will sit down to power and sales revenue. By affecting breakfast tomorrow morning and suffer employees and vendors, they impact on headline shock involving his or her operating costs. By affecting creditors, they company is significant. The Economist impact on the cost of debt capital. And by magazine reported recently that Oxford affecting equity investors, they impact on Metrica estimates that executives have an earnings multiples and equity value. 82% chance of facing a corporate disaster There’s more. Another group of external within any five-year period, up from 20% stakeholders impacted by reputation, whose two decades ago. More than ever, rather actions can have life-altering consequences than shaping the news, companies are for most companies, are the regulators. This playing catch-up. Companies have reached issue’s case study on risk and reputation the limits of corporate branding and are management looks at what happens when realising the weaknesses in traditional executives at an iconic firm admired for its marketing.
    [Show full text]
  • A Brief History of Goldman Sachs
    A Brief History of Goldman Sachs Established 1869 In 1869, a German immigrant named Marcus Goldman moved to New York City with his family and opened a one-room basement office next to a coal chute at 30 Pine Street in Lower Manhattan. During a period of tight and expensive bank credit, Goldman offered the local merchants an alternative. He would purchase their promissory notes and then sell the notes to New York’s commercial banks, becoming a pioneer in what became known as the commercial paper business. With the addition of his son-in-law, Samuel Sachs, in 1882, and his son, Henry Goldman, in 1885, Marcus Goldman’s enterprise became a partnership with a new name: Goldman, Sachs & Co. By the time the firm joined the New York Stock Exchange in 1896, Goldman Sachs was a leader in commercial paper sales. As the firm’s clients grew in number, it opened offices in Boston and Chicago (1900), San Francisco (1918), and Philadelphia and St. Louis (1920), becoming a national firm. In 1897, Goldman Sachs established relationships with financial firms in major European capitals, providing an array of services that included foreign exchange, letters of credit, gold shipments and arbitrage. In the early 1900s, as clients increasingly needed larger amounts of long-term capital, the firm began to establish its investment banking business. In two of the firm’s first public transactions— initial stock offerings for General Cigar and Sears Roebuck, both in 1906—Goldman Sachs broke new ground in making equity and debt securities more attractive to investors.
    [Show full text]
  • Ethical Challenges of Complex Products: Case of Goldman Sachs and the Synthetic Collateralized Debt Obligations
    International Business Research; Vol. 13, No. 6; 2020 ISSN 1913-9004 E-ISSN 1913-9012 Published by Canadian Center of Science and Education Ethical Challenges of Complex Products: Case of Goldman Sachs and the Synthetic Collateralized Debt Obligations Franklin M. Lartey1 1 Cox Communications, 6305 Peachtree Dunwoody Road, Atlanta, GA 30328, USA Correspondence: Franklin M. Lartey, Cox Communications, 6305 Peachtree Dunwoody Road, Atlanta, GA 30328, USA. Received: May 6, 2020 Accepted: May 22, 2020 Online Published: May 25, 2020 doi:10.5539/ibr.v13n6p115 URL: https://doi.org/10.5539/ibr.v13n6p115 Abstract In analyzing complex products, this study selected the company Goldman Sachs and one of its product offerings, the synthetic collateralized debt obligation (synthetic CDO). The study later analyzed the ethical implications of providing such a complex product to customers. A review of the literature indicates that researchers identified this product and other associated derivatives of the mortgage backed securities as the main causes of the 2008 financial crisis in the United States of America. As such, Goldman Sachs‟ offering of the product posed ethical and moral issues. An analysis of the company and its offering was done under the lenses of various ethical theories such as Kohlberg's theory of moral reasoning, the Kantian ethics, the utilitarian perspective, Friedman‟s shareholder theory, the stakeholder theory, the market approach to consumer protection, and the contract view of consumer protection. Besides Friedman‟s shareholder theory, all other theories judged the product offering morally wrong and unethical. At the end of the study, the author suggested a contribution to knowledge regarding Kohlberg‟s theory of moral reasoning in its application to organizations.
    [Show full text]
  • What Happened to Goldman Sachs: an Insider’S Story of Organizational Drift and Its
    What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and its Unintended Consequences Steven G. Mandis Submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Graduate School of Arts and Science COLUMBIA UNIVERSITY 2014 ©2013 Steven G. Mandis All Rights Reserved Abstract What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and its Unintended Consequences Steven G. Mandis This is the story of the slow evolution of Goldman Sachs – addressing why and how the firm changed from an ethical standard to a legal one as it grew to be a leading global corporation. In What Happened to Goldman Sachs, Steven G. Mandis uncovers the forces behind what he calls Goldman’s “organizational drift.” Drawing from his firsthand experience; sociological research; analysis of SEC, congressional, and other filings; and a wide array of interviews with former clients, detractors, and current and former partners, Mandis uncovers the pressures that forced Goldman to slowly drift away form the very principles on which its reputation was built. Mandis evaluates what made Goldman Sachs so successful in the first place, how it responded to pressures to grow, why it moved away from the values and partnership culture that sustained it for so many years, what forces accelerated this drift, and why insiders can’t – or won’t – recognize this crucial change. Combining insightful analysis with engaging storytelling, Mandis has written an insider’s history that offers invaluable perspectives to business leaders interested in understanding and managing organizational drift in their own firms.
    [Show full text]
  • 20 Annual Report 20
    2020 Annual Report GUIDING PRINCIPLES FOR FAIRFAX FINANCIAL HOLDINGS LIMITED OBJECTIVES: 1) We expect to compound our mark-to-market book value per share over the long term by 15% annually by running Fairfax and its subsidiaries for the long term benefit of customers, employees, shareholders and the communities where we operate – at the expense of short term profits if necessary. 2) Our focus is long term growth in book value per share and not quarterly earnings. We plan to grow through internal means as well as through friendly acquisitions. 3) We always want to be soundly financed. 4) We provide complete disclosure annually to our shareholders. STRUCTURE: 1) Our companies are decentralized and run by the presidents except for performance evaluation, succession planning, acquisitions, financing and investments, which are done by or with Fairfax. Investing will always be conducted based on a long term value-oriented philosophy. Cooperation among companies is encouraged to the benefit of Fairfax in total. 2) Complete and open communication between Fairfax and subsidiaries is an essential requirement at Fairfax. 3) Share ownership and large incentives are encouraged across the Group. 4) Fairfax will always be a very small holding company and not an operating company. VALUES: 1) Honesty and integrity are essential in all our relationships and will never be compromised. 2) We are results oriented – not political. 3) We are team players – no ‘‘egos’’. A confrontational style is not appropriate. We value loyalty – to Fairfax and our colleagues. 4) We are hard working but not at the expense of our families. 5) We always look at opportunities but emphasize downside protection and look for ways to minimize loss of capital.
    [Show full text]
  • The Investment Bank Job
    Institutions in Crisis THE INVESTMENT BANK JOB The U.S. Securities and Exchange Commission v. Goldman Sachs Andrew Schrieber On April 16, 2010, the Securities and Exchange Commission (SEC) charged Goldman Sachs and Vice Presi- dent Fabrice Tourre with defrauding investment client ACA Management LLC (ACA) through the prepa- ration and marketing of a financial product linked to subprime, or second-rate, mortgages. This financial instrument, entitled Abacus 2007-AC1 (Abacus), had been created specifically for an institutional client, John Paulson, the manager of the hedge fund Paulson & Company. When Goldman traders met with ACA they presented an array of possible mortgage investments from which ACA could select. As was made apparent in the subsequent S.E.C investigation, however, during its interactions with ACA, Goldman delib- erately misled the company to believe that Paulson & Company was also investing in Abacus. In actuality, Paulson & Company was making the opposite investment wager, with the expectation that Abacus would lose money. Paulson’s firm, with Goldman’s assistance, was betting that the housing market would collapse. Coming on the heels of the financial crisis, this behavior epitomized to many the erosion of integ- rity within the financial industry that had occurred following the regulatory reforms in the 1980s and late 1990s. Observers point to a number of changes over those decades that contributed to a fundamental, and negative, shift in internal practices and organizational culture. These changes include a shift from the partnership model toward the publicly traded bank and a loosening of govern- mental regulatory reins. This case study examines the evolution of the modern financial industry and the organizational and structural shifts within Wall Street banks that led to the case against Goldman Sachs.
    [Show full text]
  • Jamie Kempner: Loeb Partners' Merchant of Banking
    1/27/2016 Jamie Kempner: Loeb Partners’ Merchant of Banking | Institutional Investor Jamie Kempner: Loeb Partners’ Merchant of Banking 20 JAN 2016 ­ JULIE SEGAL During the Depression, James (Jamie) Kempner’s great­grandfather, Carl Loeb, founded the brokerage firm that would go on to become Shearson Loeb Rhoades. Today, the Loeb patriarch would recognize what his heir has in mind for the family office that manages the wealth that survives him. After all, Kempner’s idea to transform Loeb Partners Corp. into a merchant bank — which advises and raises capital for private companies as well as invests in them — points to a business that thrived on Wall Street until partnerships like Goldman Sachs & Co. and Morgan Stanley grew into financial supermarkets in the 1980s and started to go public. The merchant bank model withered as partners’ money was transformed into shares of public stock and private equity firms grew and evolved to take on the lion’s share of investing in private companies. Kempner, who spent 33 years at investment bank Lazard before joining Loeb Partners in January 2014, works alongside his 88­year­old father, Thomas, chairman and CEO of the firm. As president, the younger Kempner is building an investment banking advisory business for middle­market companies. He is also president and Chief operating officer of Loeb Holding Corp., parent company of Loeb Partners. It’s a good time to refashion the Loeb family business into a merchant bank. Since the financial crisis, regulators around the globe have enacted legislation to prevent banks from taking the types of risks that led to the credit freeze of 2008 and the subsequent market meltdown.
    [Show full text]
  • Preparing Chicago's Teens for Success
    2013 ANNUAL REPORT Preparing Chicago’s Teens for Success Working with After School Matters helped me learn more about college readiness, and it also helped me with writing resumes and job interviews. I think this program really helped me prepare for college.” —After School Matters Teen 16 years old, Rogers Park LETTER FROM THE BOARD CHAIR & CEO Dear Friends & Colleagues, First, and most importantly, thank you for supporting After School Matters. Whether you did so by giving financially, volunteering your time, advocating on behalf of a teen, or simply reading this report — we are immensely grateful. As you will see throughout these pages, we have much to celebrate here at After School Matters. Teens who participate in our programs are achieving success and realizing their dreams at higher rates than their peers who do not participate. Still, we have much work to do. As we look back on FY13, our first full years in the respective positions of Board Chair and Chief Executive Officer, we are overwhelmed by the potential of Chicago’s teens to ensure a world-class future for our city. Without your continued support, that potential may go unrealized. As you will see throughout this report, After School Matters has proven that teens from even the most challenging backgrounds can accomplish great things if given the right opportunities. By providing such opportunities, we create life-changing experiences. The success stories, the impact, the smiles that you see throughout these pages should keep us all motivated to continue this important work on behalf of Chicago’s teens. Thank you for all that you do.
    [Show full text]
  • Goldman Sachs
    Goldman Sachs From Wikipedia, the free encyclopedia The Goldman Sachs Group, Inc. Type Public NYSE: GS Traded as S&P 500 Component Industry Banking, Financial Services Founded 1869 Marcus Goldman, Founder(s) Samuel Sachs 200 West Street, Headquarters New York, New York, U.S. Area served Worldwide Lloyd Blankfein (Chairman & CEO) Gary Cohn Key people (President & COO) David Viniar (Executive VP & CFO) Asset management, commercial banking, commodities, investment Products banking, investment management, mutual funds, prime brokerage Revenue US$ 39.161 billion (2010)[1] Operating US$ 12.892 billion (2010)[1] income Net income US$ 8.364 billion (2010)[1] AUM US$ 840 billion (2010)[1] Total assets US$ 911.332 billion (2010)[1] Total equity US$ 77.400 billion (2010)[1] Employees 35,700 (2010)[1] Website GoldmanSachs.com The Goldman Sachs Group, Inc. (NYSE: GS) is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients. Goldman Sachs was founded in 1869 and is headquartered at 200 West Street in the Lower Manhattan area of New York City, with additional offices in major international financial centers. The firm provides mergers and acquisitions advice, underwriting services, asset management, and prime brokerage to its clients, which include corporations, governments and individuals. The firm also engages in proprietary trading and private equity deals, and is a primary dealer in the United States Treasury security market. Former employees include Robert Rubin and Henry Paulson who served as United States Secretary of the Treasury under Presidents Bill Clinton and George W.
    [Show full text]
  • Preview of “Print”
    12/4/13 Inside the Breakup of the Pritzker Empire - WSJ.com WSJ News, Quotes, Companies, Videos SEARCH BUSINESS DON's Journal TOP STORIES IN BUSINESS 1 of 12 2 of 12 3 of 12 4 of 12 Inventories High Court Hears Is a Peanut Butter China Issues 4G Threaten to Disgruntled Pop-Tart an Mobile Licenses Squeeze Clothin... Frequent F... Innovati... BUSINESS Inside the Breakup of the Pritzker Empire Decadelong Restructuring Wrenched Apart Wealthy, Philanthropic Family Email Print Save 34 Comments By ANUPREETA DAS CONNECT Updated Nov. 26, 2013 3:47 a.m. ET Popular Now What's This? ARTICLES Opinion: Romain 1 Hatchuel: The Coming Global Wealth Tax Enlarge Image Tom Pritzker helped guide the breakup of his family's holdings. Jennifer S. Altman for The Wall Street Opinion: The Journal 2 Human Wealth of Nations For the Pritzkers of Chicago, deal making was central to the family business, a skill Tom Pritzker learned at his father's knee. Mr. Pritzker is now looking to build a new fortune after wrapping up the biggest deal of his Fasts for Weight long career, breaking up the multibillion-dollar family empire started from scratch by his 3 Loss vs. Traditional great-grandfather nearly a century ago. Diets The decadelong restructuring wrenched apart one of the wealthiest and most philanthropic families in the U.S., a clan that built such iconic brands as Hyatt Hotels Corp. H -0.15% , and established the Pritzker Architecture Prize, the profession's highest honor. Opinion: Detroit's Bankruptcy 4 Breakthrough "We didn't do it perfectly.
    [Show full text]