Just because Goldman Sachs’ (GS) reputation has been hit hard in recent months doesn’t mean its shares have taken the same sort of abuse.
Quite the opposite, in fact, as Goldman’s stock has enjoyed an 18% run-up throughout the last six weeks even as the firm’s rep has been under attack.
Goldman, famously dubbed the “Vampire Squid” by Rolling Stone writer Matt Taibbi, has often been criticized for its controversial role throughout the financial crisis. Recently it seems like Goldman has been bending over backward trying to preserve its reputation. The latest defense came last month from Lucas van Praag, Goldman’s head of corporate communications, who went into granular detail in a blog post rebutting a NY Times story that described the firm’s controversial relationship with AIG.
But putting the negative publicity aside for a second, Chad Brad, founder and president of Peridot Capital, makes the case that Goldman shares are undervalued and at current levels present a good buying opportunity for investors.
Goldman is still the “best investment bank in the world…has seen many of its competitors go out of business or dramatically scale back operations, and yet at around $170 per share the stock still trades for less than 10 times estimated 2010 earnings,” he says.
Brand, which discloses his firm is long Goldman shares, notes the firm trades at a lower valuation than both Bear Stearns and Lehman did pre-crisis.
And buying Goldman at less than 10x earnings is a “tremendously attractive risk-reward opportunity,” he adds.
Goldman shares were recently off 1.4% at $172.44.