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Goldman Sachs (GS) to Combine 4 Private-Investing Units

Zacks Equity Research

Under the new CEO’s strategy to simplify operations, Goldman Sachs GS is integrating four separate private-investment groups into a single unit. The restructuring is expected to take months. The news was first reported by The Wall Street Journal.

The new unit will comprise arms that invest in private companies, real estate and other hard-to-access deals, and is expected to reflect about $140 billion in assets. The move is aimed to make Goldman’s alternative division more appealing to investors and boost stock price.

Per the article, the new division’s core business will be merchant-banking unit, which has about $100 billion invested in private assets. Notably, a special situations group will be joining the core with a portfolio of about $30 billion. Also, Goldman’s strategic investing group that makes investments in financial technology startups, will be part of it.

In March, Business Insider had reported Goldman’s plan to review alternative investments activities to decide whether restructuring or uniting them would be a wise option. CEO David Solomon finds growth opportunities in the alternatives unit as he previously had said, "based on our track record, there is an opportunity to raise additional third-party funds across equity, credit and real estate, thereby, augmenting fee income."

Goldman also plans to raise new funds from outside investors, and may do a fundraising this year for a real-estate equity fund, per the article.

The bank’s focus on generating steady revenues and bolstering its consumer lending platform seems impressive. While Goldman is on track to remodel its business into a more profitable organization, it continues to face several legal investigations, which are likely to keep costs elevated.

Shares of the company have gained 11.8% in the past six months compared with 4.7% growth of its industry.

Goldman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few stocks from the finance space worth a look E*TRADE Financial Corporation ETFC, Evercore EVR and Interactive Brokers Group IBKR. All these stocks are currently carrying a Zacks Rank #2 (Buy).

Over the past 60 days, E*TRADE has witnessed 1.6% upward earnings estimate revision for the current year. Its shares have gained 4.1% in the past six months.

Evercore’s earnings estimates for 2019 have been revised 3.1% upward over the past 60 days. Shares of the company have gained 20.9% in the past six months.

Interactive Brokers earnings estimates for the current year have remained stable over the past 60 days. Shares of the company have gained 1% in the past six months.

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