Brokerage Stocks: Good Money After Bad?

Hickey and Walters (Bespoke) submit: Brokerage stocks are doing well this morning in part due to Goldman Sachs' (GS) announcement that it and a group of investors were investing $3 billion in its Global Equity Opportunities Fund, which as of Friday was down 30% in the last week! Besides the obvious question which is how can there be a lack of liquidity in the market if a fund down 30% in the last week can get $3 bln in new capital, one has to wonder if the current investment by Goldman Sachs is a case of good money going after bad.

In June, Bear Stearns (BSC) pledged an additional investment of up to $3.2 bln in its distressed hedge funds, and judging by its stock price, the market was not too thrilled with the investment. Since the cash infusion was announced, BSC is down over 23%, which is the second worst performance among the five major brokerages.

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