Goldman Sachs: Not So Confident After All?

Greg Farrell, reporting in the Financial Times, says:

For the eight-month period for which figures are available, Goldman partners sold more than $691m in company stock, even as the firm expanded its public float from 395m to 503m shares in several capital raises.

For the comparable period between September 2007 and April 2008, when the average share price was substantially higher, Goldman partners sold about $438m in stock.

The average price of GS stock through this period was less than $100 per share, although the timing of sales given in the article would indicate that $280 million was probably sold at prices averaging less than $80 per share. The number of shares sold was approximately three times the number sold in the corresponding period 2007-08, and the proceeds received approximately 50% more than the year earlier period.

These sales (8/2008 to 4/2009) constituted sale of about 1.5% of the market capitalization for GS. In 2009, GSW has increased its float by approximately 27% through several equity placements, right after the bulk of these sales.

Talk about not eating your own cooking! One is led to believe that GS executives' confidence in their company was diminished during this time period compared to a year earlier. Do you think they were telling that to the investors they were getting to put in more capital?

Read the entire Greg Farrell article here.

Comments

[nobby73:]

Yes, but bonuses had a higher stock component and we know partners were given loans in 2007/2008 in order to meet margin payments on other positions. Also, there is high proportion of bankers who always sell the stock as soon as they get it, as a kind of averaging policy, so I don't think this is telling us about any worries about the future profitability of the franchise.

Jul 14 09:30 AM

[Steven Hansen:]

Agree with above comment John. as you know it is not wise to own much stock in the company you work for.

Jul 15 11:19 PM

[sleepless_o...:]

Agree with what the commenters had to say, but the author points out that the most recent year saw much above the normal stock sales by insiders. Was that just a coincidence?

Jul 16 10:42 AM

[kruser53:]

Sleepless has a point. The author points out that insiders were selling 1.5% of the float at the same time that they were increasing the float by 27%. This clearly doesn't smell right.

Jul 16 11:09 AM