Custom Search

Monday, August 24, 2009

Goldman Sachs "huddle"


Check this story out in today's WSJ:

Every week, Goldman analysts offer stock tips at a gathering the firm calls a "trading huddle." But few of the thousands of clients who receive Goldman's written research reports ever hear about the recommendations.

At the meetings, Goldman analysts identify stocks they think are likely to rise or fall due to earnings announcements, the direction of the overall market or other short-term developments. Some of their recommendations differ from ratings printed in Goldman's widely circulated research reports. Some Goldman traders who make bets with the firm's own money attend the meetings.

Critics complain that Goldman's distribution of the trading ideas only to its own traders and key clients hurts other customers who aren't given the opportunity to trade on the information.

A huddle? It's is just another opportunity for Goldman to allow front-running, and then, to let Goldman front run those buyers with their own trading!

The tips usually go to top clients who have expressed interest in having the information and have short-term investment horizons, he says.

Why is that? Didn't I front-run Goldman's calls on GOOG on this blog? And I wasn't even in the huddle!

Analysts have a financial incentive to give clients useful information. Goldman sets aside roughly 50% of money allotted each year to analyst compensation to distribute based on feedback from trading customers.

So they get paid by how much inside dope they give their clients! How about Goldman's prop trading?

Typically, traders who wager firm capital are walled off from those handling customer orders so that they don't take advantage of information about client trading, which securities regulations forbid. Goldman says its franchise risk managers don't trade on client information and must first share trading-huddle tips with clients before acting on the tips themselves.

Huh?

They are "walled off" but then they trade on the information after they first give it to clients that they are supposedly walled off from?

Now remember how I banged Goldman Sachs when Garmin beat earnings estimates? I'm sure you probably couldn't understand my "Whoa nellie!!!!" expression. But wasn't Keith Jackson the voice of college football?

Did you see this part of the WSJ article?

At a huddle on July 31, for example, the firm's technology analysts and traders discussed more than a dozen stocks, ranging from Garmin Ltd. to Microsoft Corp.

It looks like Goldman got their "huddle" wrong!

And now the world knows that Goldman modeled their huddle, after Belichick and not Lombardi.

Which is why you would never see the Goldman Sachs trophy.

Because even if they had one, Goldman would steal it!

No comments :