Goldman Sachs (GS) had a rough second quarter. Shares were down about 14% and sentiment was particularly bad. Even the firm’s vaulted trading operations stumbled, showing a loss on 15 days in the quarter compared to two days for J.P. Morgan (JPM). However, it appears the selling is overdone. The stock is now trading at a price to tangible book ratio of just 0.86. This is very cheap. Some of the big investors that I follow seem to agree, and I’d like to highlight five of them who either initiated a position or increased their stakes in Goldman in Q2.
John Griffin is the president of Blue Ridge Capital and is known as a Tiger Cub. These are portfolio managers who worked under legendary investor Julian Robertson, and then left to run their own hedge funds. Goldman Sachs makes up about 1.1% of Griffin’s portfolio. He increased his holdings by 73% last quarter and now owns 546,000 shares. Griffin also owns J.P. Morgan, Blackrock (BLK), and a few other big financials.
Julian Robertson, the mentor to all of the Tiger Cubs and the founder of Tiger Management in 1980, bought more stock in Goldman Sachs last quarter as well. Robertson seems to be more bullish on the name than Griffin. Robertson’s firm holds a 6% position in Goldman and increased it last quarter by 17%. He now owns about 169,000 shares. Goldman is his fifth-largest holding. Robertson holds similar size stakes in Mastercard (MA) and Visa (V).
Mohnish Pabrai runs a very focused portfolio and Goldman Sachs makes up a big part of it. The investment bank constitutes 11.2% of his portfolio. It’s his fourth-largest holding. Last quarter Pabrai more than doubled his stake in Goldman Sachs. He now owns about 231,000 shares. He had first bought shares in Q4 2008 and ridden it up from below $100 per share. This is his first transaction with Goldman since that initial purchase.
I’ve highlighted a lot of Michael Price’s moves from the past quarter, including his purchases of Citigroup (C) and Bank of America (BAC). He also increased his stake in Goldman Sachs by 38% last quarter. It now makes up 1.1% of his portfolio. This isn’t one of his largest holdings, but he obviously sees value in the shares when they are trading at this level. By contrast, Price’s Citigroup holdings make up 4.9% of his portfolio.
I recently highlighted Francis Chou unique background. Chou manages about $400 million and counts Goldman as his ninth-largest holding. Chou bought into the stock for the first time last quarter and it now makes up 3.5% of his very focused portfolio. Chou only owns 28 stocks, so when he buys, he has a lot of conviction in the position. Chou’s largest holding is AbitibiBowater (ABH), which is a manufacturer of coated, specialty paper, newsprint, lumber products and bleached market pulp. Prem Watsa also is a large holder of AbitibiBowater shares.