Just this month, the investment bank has been a lead underwriter on three major IPOs. Capital-markets activity is coming back after a sluggish stretch.
Goldman Sachs Group appears to be hitting its stride again, a shift that may soon put to rest doubts about the leadership of Chief Executive David Solomon.
That success helps to counter the onslaught of negative press the bank has faced as it admitted to losing $4 billion in its consumer business over the last three and a half years. Few on Wall Street understood why Goldman, with its white shoe reputation and relationships, would attempt to appeal to the mass market. The costly mistake raised questions about Solomon’s leadership.
The bank also lost 200 partners over the last five years. While the pace of departures is consistent with prior periods, some of the more recent exits appear to have been due more to discontent than to moves to take advantage of other opportunities.While it is too early for the bank’s problems to be in the rearview mirror, Goldman may be at an inflection point. And Solomon appears to have the support of Goldman’s board, according to a note from Mike Mayo, analyst at Wells Fargo Securities.
Part of Mayo’s bullishness comes from the fact that Goldman is trading at near book level, which historically has been a good entry point for investors. He sees book value growing by 40% over the next five years and said he is encouraged by the return of capital-markets activity, which has been a drag on earnings over the past 18 months.
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