By The Huffington Post News Editors
OMAHA, Neb. — Warren Buffett‘s company will likely become one of the biggest shareholders in Goldman Sachs Group Inc. later this year, and Berkshire Hathaway Inc. won’t even have to part with any cash to do so.
Berkshire and Goldman said Tuesday they had renegotiated an agreement that gave Berkshire the right to buy 43.5 million shares of the investment bank for $115 per share. Now the 2008 deal will be settled with stock this fall.
Filed under: Banking, U.S. Government
The annual stress tests on the biggest U.S. banks produced a few surprises when the results were announced last night. The capital plans submitted by J.P. Morgan Chase & Co. (NYSE: JPM), Goldman Sachs Group Inc. (NYSE: GS), BB&T Corp. (NYSE: BBT) and Ally Financial were rejected. That means that shareholders are unlikely to receive larger dividends or benefit from increased share buybacks from these banks.
Among the banks getting approval for their capital plans were Citigroup Inc. (NYSE: C) and Bank of America Corp. (NYSE: BAC). American Express Co. (NYSE: AXP) received approval to pare back its stock repurchase plan.
J.P. Morgan already had received approval to repurchase $6 billion in stock and boost its quarterly dividend from $0.30 to $0.38 a share, but the bank’s CEO warned that it may have to cut its plans after it prepares a new capital plan at the end of the third quarter. Goldman will also submit a new plan at the same time.
Bank of America plans to repurchase up to $5 billion in common stock and $5.5 billion in preferred stock. The bank’s quarterly dividend of $0.01 will not change.
Citigroup plans to buy back $1.2 billion in common stock through the end of the first quarter of next year and plans no change to its $0.01 quarterly dividend.
Shares of J.P. Morgan are trading down about 2% in the premarket this morning, at $50.06 in a 52-week range of $30.83 to $51.00.
Goldman’s shares are trading down about 1.6%, at $151.62 in a 52-week range of $90.43 to $159.00.
Bank of America is trading up 3.7% at $12.56, a 52-week high, in a current range of $6.72 to $12.44.
Citigroup is trading up fractionally at $47.50 in a range of $24.61 to $47.92.
Filed under: 24/7 Wall St. Wire, Banking & Finance, Regulation Tagged: AXP, BAC, BBT, C, GS, JPM
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Filed under: Investing
Boeing Co. (NYSE: BA) says its 787 could be back in commercial service within a few weeks. (Reuters)
Samsung introduces its Galaxy S4 to compete with the Apple Inc. (NASDAQ: AAPL) iPhone. According to Reuters:
The S4 can stop and start videos depending on whether someone is looking at the screen, flip between songs and photos at the wave of a hand, and record sound to run alongside snapped still pictures.
J.P. Morgan Chase & Co. (NYSE: JPM) is accused of having executives who shielded senior management about the London Whale trades, which caused $6 billion in losses. (Reuters)
The Federal Reserve sharply criticizes the capital planning of J.P. Morgan and Goldman Sachs Group Inc. (NYSE: GS), each of which wants to return more money to shareholders. (WSJ)
Oil production in North America is good enough that crude delivered by the Keystone XL pipeline might be exported, another factor that might help opponents of the project. (WSJ)
Volkswagen will increase its output in China as much as 70% by 2018. (WSJ)
An Urban Institute study shows that the “wealth building” of young people does not match that of their parents. (NYT)
Filed under: 24/7 Wall St. Wire, Press Digest Tagged: AAPL, BA, GS, JPM
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Filed under: Commodities & Futures
When the commodity traders at Goldman Sachs Group Inc. (NYSE: GS) say that commodities may be oversold right now they exclude gold from the rest of the asset class. In the near term, the Goldman analysts think that commodities will rise 2% to 6% although the firm remains neutral on commodities’ 12-month outlook, expecting a return of 3%.
We’ve already gone over some of the issues with investing in gold, either in mining companies like Barrick Gold Corp. (NYSE: ABX) and Kinross Gold Corp. (NYSE: KGC) or in ETFs like the SPDR Gold Trust (NYSEMKT: GLD). Goldman thinks that petroleum and copper are the short-term winners. Petroleum due to the lack of spare capacity and increased demand from emerging markets, and copper because the pull back in pricing last year was driven by concerns about China that no longer apply.
To which we say, “Maybe.” Petroleum, at least in the form of crude oil, costs more on the spot market now than it does on the futures market. That backwardation could be a buying opportunity if the global economy is in fact accelerating and will continue to do so in the second half of this year. The suggestion is that a “buy and hold” strategy will pay off because crude oil supplies will come under pressure.
That’s what happened (to some extent) in 2008 when crude went to $147 a barrel. How well do the conditions from 2008 fit the conditions of the crude market in 2013? Perhaps not all that well.
As for copper, the Chinese government has recently said it will soak up some of the liquidity in the country’s banks in an effort to keep inflation under control. New rules related to real estate and housing could cool some of the exuberance in the construction sector in China, too. On one hand, we could be in for a repeat of 2008 when commodity prices went on an upward tear. On the other hand, commodity producers will continue to overproduce, keeping prices low.
Where does this leave the big banks like Goldman, J.P. Morgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS), all of which reported double-digit declines in their commodities business last year? Lower market volatility plus restrictions imposed on trading by the Dodd-Frank Act have hit the banks’ trading operations hard. The banks could try to divest their commodity arms or spin them off into separate companies, but none has said much at all about its plans.
And that lead into gold bit? Last year Glencore International plc and Trafigura, two of the world’s largest commodities trading houses, kept large supplies of lead in storage and off the market in an effort to raise the price, which had fallen to a 52-week low of around $0.72 a pound. Today lead sells for about $1.00 a pound. Gold is up about 3% in the same period.
Filed under: 24/7 Wall St. Wire, China, Commodities & Metals Tagged: ABX, GLD, GS, JPM, KGC, MS<p style="clear: both;padding: …read more
Source: FULL ARTICLE at DailyFinance
(Reuters) – A federal judge on Monday ordered former Goldman Sachs Group Inc director Rajat Gupta to reimburse $6.22 million to the bank to help cover its legal expenses related to his criminal insider trading case. Goldman had sought to recover $6.91 million from Gupta, and U.S. District Judge Jed Rakoff said the bank had proved it was entitled to 90 percent of what it requested. Gupta is appealing his June 15, 2012 conviction and two-year prison term for leaking boardroom secrets to Raj Rajaratnam, the hedge fund manager at the center of a multi-year U.S. …
Henry Cornell, vice chairman of Goldman Sachs Group Inc.’s (GS) merchant-banking unit, is retiring, the Financial Times reported Tuesday, citing an internal memo. …read more
Source: FULL ARTICLE at Fox Business Headlines
Filed under: Technology, Value Investing, Telecommunications
When you are an industry leader and one of the largest companies in the country of Sweden, employing more than 100,000 workers, it seems almost impossible that a turnaround would ever be necessary. However, it is not uncommon for large corporations to stray from the path that brought them their greatest success. For telecommunications equipment giant Ericsson (NASDAQ: ERIC), the path back to success may be one that got them there in the first place.
Posting extremely strong fourth-quarter numbers that were driven by high demand for networking equipment in the U.S. market, Ericsson blew by the Wall St. expectations. Sales for the quarter were 66.9 billion SEK, up 23% sequentially and up 5% from the year-ago quarter. Network equipment sales were up 6% from a year ago, driven mainly by North America, while network sales were up 31% sequentially due to normal year-end seasonality. The results translate to $10.5 billion in U.S. currency, which is well ahead of the consensus estimate of $9.5 billion.
CEO Hans Vestberg said in a statement:
Segments showed mixed developments during the year with strong growth in Global Services and Support Solutions, while Networks had a more challenging year. Support Solutions went from losses in 2011 into profitability and together with Global Services represented close to 50% of Group sales in 2012, compared to 42% in 2011.
Vestberg also said that North America was the company’s strongest market throughout 2012 and was driven by continued mobile broadband investments and demand for services. What is so impressive about things of late is that Ericsson has much exposure to Europe, the most troubled spot in the developed world for investors weighing risk these days.
Wall St. analysts embraced the earnings rebound and responded with a flurry of upgrades. On February 1, Goldman Sachs Group Inc. (NYSE: GS) upgraded the stock from Neutral to the prized Conviction Buy List. Credit Suisse Group (NYSE: CS) moved its rating to Neutral from Underperform on the same day. Canaccord Genuity and Citigroup Inc. (NYSE: C) both raised their price targets on the first, following Deutsche Bank A.G. (NYSE: DB) raising the stock to Buy from Hold on January 29. The current consensus price target for the stock is $11.50. Given the recent upgrades, that may soon be lifted.
One very positive development for the company may be a departure from its money-losing joint venture with STMicroelectronics N.V. (NYSE: STM), the largest European semiconductor company. While it recognized a large charge for its participation, an expected third-quarter 2013 exit will let the company focus on the profitable core businesses.
The Ericsson turnaround may start to get investors looking at two other formerly dominate European companies fighting to regain lost glory. Both Finnish phone giant Nokia Corp. (NYSE: NOK) and French telecommunications equipment maker Alcatel-Lucent S.A. (NYSE: ALU) are trading under $5. Despite industry problems and a loss of market share for both companies, the low stock prices alone could make one or both of them takeover targets if a bottom-fishing turnaround or asset buyer surfaces.
For Ericsson the strength in North America may continue to provide a strong tailwind. With smartphone and tablet sales booming and an ever increasing demand for broadband consuming content, it may be in the right place at the right time to complete its turnaround. Wall St. analysts have at least become very vocal with a wave of upgrades in the Ericsson turnaround story.
Filed under: 24/7 Wall St. Wire, Technology, Technology Companies, Telecom, Telecom & Wireless, Turnarounds, Value Investing Tagged: ALU, C, CS, DB, ERIC, GS, NOK, STM
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Source: FULL ARTICLE at DailyFinance
Jim O’Neill, the chairman of Goldman Sachs Group Inc‘s asset management division who coined the popular term “BRIC” to refer to four fast-growing emerging markets, will retire later this year, according to an internal memo sent out on Tuesday.
Source: FULL ARTICLE at Fox Business Headlines
President Barack Obama will continue efforts Tuesday to build support for overhauling the nation’s immigration system by meeting with labor leaders and business executives from companies such as Goldman Sachs Group Inc. (GS) and Alcoa Inc. (AA).
Source: FULL ARTICLE at Fox Business Headlines
Asia markets rose Tuesday, with Japan stocks boosted by a solid rally in banks, although Hong Kong shares lagged behind, weighed by Industrial & Commercial Bank of China Ltd. after Goldman Sachs Group Inc. pared its stake in the lender.
Source: FULL ARTICLE at Fox Business Headlines
Lawyers for former Goldman Sachs Group Inc board member Rajat Gupta are urging a federal appeals court to reverse his insider trading conviction, arguing that a judge shouldn’t have allowed wiretaps to be heard at trial.
Source: FULL ARTICLE at Fox Business Headlines
Lawyers for former Goldman Sachs Group Inc board member Rajat Gupta are urging a federal appeals court to reverse his insider trading conviction, arguing that a judge shouldn’t have allowed wiretaps to be heard at trial.
Source: FULL ARTICLE at Fox Business Headlines
BlackRock will name former Goldman Sachs Group Inc. (GS) partner Wang Hsueh-ming as chairman of Blackrock Inc.’s (BLK) China operations, The Financial Times reported.
Source: FULL ARTICLE at Fox Business Headlines
Employees at Goldman Sachs Group Inc. (GS), on average, stand to take home at least 10% more in annual compensation than a year ago, while staff at Morgan Stanley (MS) could see their total pay flat to up slightly, based on funds booked so far for 2012 and projections by analysts and compensation consultants.
Source: FULL ARTICLE at Fox Business Headlines
Employees at Goldman Sachs Group Inc. (GS), on average, stand to take home at least 10% more in annual compensation than a year ago, while staff at Morgan Stanley (MS) could see their total pay flat to up slightly, based on funds booked so far for 2012 and projections by analysts and compensation consultants.
Source: FULL ARTICLE at Fox Business Headlines
In 2004, Harvey Schwartz, who was then head of the financing business at Goldman Sachs Group Inc‘s investment bank, came up with a new way for the bank to make money from a seemingly mundane activity: helping companies buy back their shares.
Fourth-quarter earnings season gears up next week, with reports due from several financial giants including Goldman Sachs Group Inc. (GS) and blue-chip companies such as Intel Corp. (INTC) and General Electric Co. (GE).
Source: FULL ARTICLE at Fox Business Headlines
The head of Goldman Sachs Group Inc‘s mergers and acquisition business denied that he had any role in the 2000 sale of voice recognition software company Dragon Systems to a buyer that collapsed soon afterward.
Source: Fox Business Headlines
A U.S. federal judge on Monday ordered Goldman Sachs Group Inc to take down statements from its website related to its representation of Dragon Systems in a 2000 sale that blew up when acquirer Lernout & Hauspie went bankrupt after accounting regularities emerged.
Source: Fox Business Headlines
