Why Dick Bove Downgraded Goldman Sachs To Sell (NYSE:GS)

Vertical Group’s Dick Bove, a notable financial institution badyst, downgraded Goldman Sachs Group Inc (NYSE: GS)’s inventory from Hold to Sell amid a view the Wall Street financial institution is “troubled.”

Bove has been an outspoken critic of Goldman Sachs’ management and CEO Lloyd Blankfein for a while. The administration workforce has been hesitant to vary its core enterprise mannequin and are as an alternative specializing in numerous enterprise strains which are “no longer relevant” at this time. As a outcome, the corporate is “scrambling” to turn into “more of a lender than a trader” however on the similar time administration is not making a lot info out there.

However, the badyst shied away from turning bearish on Goldman Sachs’ inventory… till two current occasions surfaced.

Options Market

The first is said to the corporate’s withdrawal from a number of elements of the choices market, the badyst wrote in his be aware. While this transfer is in keeping with the corporate’s 2015 resolution to longer function a market maker on the New York Stock Exchange, it serves as a sign that its buying and selling enterprise is in a “secular not cyclical decline.”

Venezuela

Second, Goldman Sachs’ ongoing relationship with Venezuela stays in place regardless of prior “highly questionable” transactions with the nation. Specifically, Goldman Sachs “raised money for a troubled Portuguese bank that was lending the funds to Venezuela who paid the money to a Chinese contractor who was in jail for corruption.”

Bottom line, Goldman Sachs’ is displaying buyers it has “bad judgment” and the one potential treatment is “outside blood to change its direction.”

Related Links:

Goldman Sachs Continues To Meander In Post-Earnings Trading Range

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