Goldman Sachs’ Equity Offer

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Goldman Sachs’ Equity Offer

By David Spurr on April 12, 2009 | More Posts By David Spurr | Author's Website

One glance at the above chart will tell you why Goldman Sachs (GS) decided to sell equity. They see that their stock price has had a great run and at these prices, selling additional shares is a cheap way to raise funds. If I were a buyer, I wouldn’t touch Goldman’s offer. I’d be patient and wait to buy their stock at a better entry point. Their stock has moved from 47 in December to 124 now. Additional equity is only going to dilute their share base even more.

And even more interesting to consider, if they use the funds to pay off the TARP, does that mean that earnings won’t be hitting the bottom line anymore ? Without TARP, they may revert to ridiculous compensation packages and I’m not sure that this is best for the shareholders.

If the stock price has managed to go from 47 to 124 under TARP, why would I want them to pay back the TARP?

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