Using Veritas to Construct the "Per…

29-04-2017 Hits:8769 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:11539 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:11609 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:12578 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:12949 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:13771 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:8396 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:14183 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:14300 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:14456 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:15735 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:15665 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Below are our initial observations on Goldman Sachs as compared to its peers. I've had a burning sensation telling me that GS is grossly overvalued, but I haven't had a chance to prove it empirically. I am now diverting the resources necessary to prove or disprove this "feeling". I will keep the blog posted.

 

Bank Level 1 Assets Level 2 Assets Level 3 Assets Shareholder Equity Total Assets Level 1 Assets-to-Total Assets Level 3 Assets-to-Equity Leverage (X)
Citigroup $223 $934 $133 $114 $2,183 10.20% 117% 19.21
Merrill Lynch $122 $768 $41 $32 $1,020 12.00% 130% 31.94
Lehman Brothers $73 $177 $39 $26 $786 9.20% 152% 30.59
Goldman Sachs $135 $621 $96 $43 $1,189 11.40% 226% 27.89
Morgan Stanley $115 $226 $74 $31 $1,045 11.00% 236% 33.43
                 
Based on 1Q2008 reported data          

 

·        At the end of 1Q2008 Goldman Sachs had second highest proportion of level 3 assets to total shareholder’s equity. Goldman Sachs’s level 3 assets as proportion of adjusted shareholder’s equity has increased from 161% in 2Q2007 to 258% at the end of 1Q2008. Although Goldman Sachs has high proportion of level 3 assets it has not reported significant write-downs. On the contrary the bank has reported net gains on its mark-to-market valuation adjustment on its level 3 assets of $2.0 bn in 1Q2008 as losses on securities were more than offset by gain of $5.1 bn on derivatives contracts indicating effectiveness of timeliness of derivative position under current crunch financial market conditions.  In 4Q2007 and 3Q2007 GS reported mark-to-market valuation gain(loss) on its level 3 assets of $(360) mn and $ 620 mn, respectively.

 

·        Goldman Sachs leverage is comparable to its peer group with leverage ratio of 27.89x

 

·        Goldman Sachs adjusted P/B of 1.75x is relatively high compared to its peer group. However, the same can be attributed to relatively better quality of its assets and its ability to better withstand the current problem in the financial and capital markets.

 

·        However, on the other side, Goldman Sachs has highest VaR of $171 mn  ahead of Morgan Stanley’s VaR of $107 mn and Lehman Brothers VaR of $106 mn.

·        Its investment banking and asset management fee based revenues have slowed down significantly over the past few quarters due to slow down in the capital market activities.

 

Based on these initial observations, while the stock does seem to command higher pricing multiples compared to its peers, it is likely it may be over-valued at the current price. We will have to dig deeper to precisely check if the stock is materially overvalued. I will have my team further explore Goldman Sachs’ relative strengths and weakness with respective to its peers regarding exposure of assets, revenues and will I wll post my findings.