Insider Buying At Goldman Sachs (GS) A Good Sign, But Caution Remains
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StreetInsider.com's Lon Juricic commented in a Barron's online piece yesterday evening on the recent insider purchases by a Director at Goldman Sachs (NYSE: GS).
Lon was more impressed with the Goldman insider purchase than others at Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM), that recently got a lot of press. Lon said, "this is not one of those 'rally the troops' PR moves."
Comments from Lon, not only addressed concerns about Goldman, but can also be applied to financial stocks as a whole. Given this morning's enthusiasm about a "bad bank" plan, some things he said apply.
From the Article On Concerns About Goldman and Other Banks:
"Anyone, including Warren Buffett, who has followed these insiders in the past few months has gotten clobbered in this death spiral," he says. "So far, everyone who has [subscribed to] the worst-case scenario has been the smart money; so until the worst-case scenario is proven wrong, we have to stick with that and assume that the stock could fall significantly lower."
The question of Goldman's future also remains very much up in the air, he cautions. Although Goldman has repeatedly sought to reassure shareholders, questions remain about how the massive amounts of bad debt will be handled (including the possibility of nationalization) and what it will mean for shareholders.
"If you look at Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) or American International Group (NYSE: AIG), the common shareholders got nearly wiped out, while with Citigroup (NYSE: C) you could argue that the common shareholders should have gotten wiped out, given the amount of bailout money received, but they weren't," Juricic says. "Of course, that was also under the Bush administration, so under new leadership that trend could shift back to being less lenient toward shareholders."
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