Goldman Dumps a Pile of Bad News on Shareholders

Goldman Sachs (NYSE:GS) disclosed in its 10-Q filing today that the bank will likely face legal action by AIG (NYSE:AIG) regarding dealings in mortgage backed securities between the two companies. Goldman (NYSE:GS) has accordingly recognized that costs related to mortgage-related litigation may increase from $485 million to $15.8 billion. That’s a mind-boggling jump in set asides.

In other news, Goldman (NYSE:GS) reported trading losses on 21 days in Q3, and lost more than $100 million on one of those days. However, on nine days Goldman (NYSE:GS) reported trading gains in excess of $100 million. This compares starkly with the period in the earlier year when the trading group had losses on just two days and made more than $75 million on 31 days.

The filing also revealed Goldman (NYSE:GS) had exposure of $23.8 billion to France (NYSEARCA:EWQ), $24.4 billion to Germany (NYSEARCA:EWG), and $7.6 billion to Ireland. According to GS, this is not credit risk, but “the total unhedged loss that Goldman could experience if its holdings were to get stuck in these countries.”

Here’s how Goldman and AIG are trading:

  • The Goldman Sachs Group, Inc. (NYSE:GS): The shares recently traded at $103.16, down $5.42, or 4.99%. Its market capitalization is $52.18 billion. They have traded in a 52-week range of $84.27 to $175.34. Volume today was 2,992,565 shares versus a 3-month average volume of 8,764,050 shares. The company’s trailing P/E is 15.71, while trailing earnings are $6.57 per share. The company pays a dividend of $1.40 per share for a dividend yield of 1.30%. About the company: The Goldman Sachs Group, Inc., a bank holding company, is a global investment banking and securities firm specializing in investment banking, trading and principal investments, asset management and securities services. The Company provides services to corporations, financial institutions, governments, and high-net worth individuals. Get the most recent company news and stock data here >>
  • American International Group, Inc. (NYSE:AIG): The shares recently traded at $23.20, down $0.86, or 3.57%. Its market capitalization is $44.03 billion. They have traded in a 52-week range of $19.18 to $62.87. Volume today was 2,220,916 shares versus a 3-month average volume of 7,634,610 shares. The company’s trailing P/E is 4.42, while trailing earnings are $5.24 per share. About the company: American International Group, Inc. is a holding company which, through its subsidiaries provides a varied range of insurance and insurance-related activities in the United States and abroad. The Company’s main activities include both general insurance and life insurance & retirement services operations as well as financial services and asset management. Get the most recent company news and stock data here >>

Don’t Miss: The Euro Mess Brings Out the Best in Gold

More from The Cheat Sheet