There's really little I can do after reading the earnings release from Goldman Sachs
Earlier in the week, competitors Lehman Brothers
To be sure, Goldman's quarter wasn't without its blemishes -- it would've been truly remarkable if it had come out completely unscathed. Net of hedges, the firm took a massive $1.5 billion loss on non-investment-grade credit origination, much larger than a similar charge that Morgan Stanley reported on Wednesday. Asset management also continued to struggle, and though incentive fees were up significantly from the second quarter, they were less than half the amount collected in the prior year. The firm also said it took "significant losses" in subprime loans and securities during the quarter.
On the flip side, the firm brought in a windfall $900 million during the quarter with the sale of its Horizon Wind Energy investment. Asset management was able to deliver results despite some poor fund performance -- $38 billion flowed into Goldman funds during the quarter and management fees were up 40% year over year. It was also able to "more than offset" those significant losses in subprime by taking short positions in the mortgage market. Contributing some major punch in the quarter were the equities division, which more than doubled revenue from the prior year, and investment banking, which increased revenue 67% thanks to a big jump in financial advisory fees.
From an investor's perspective, Goldman can be a tough business to evaluate because it is so opaque and there are so many moving parts. For that reason, there likely will be some desire to put a Barry Bonds-style asterisk next to Goldman's results. But asterisk or not, when a company has a slugging percentage like this, it's hard not to want it hitting home runs for your team.
More financial Foolishness:
Want some new stock ideas? Learn more about what Motley Fool CAPS players -- now 65,000 strong -- think of the company you're interested in.
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy knows that Barry Bonds puts his pants on one leg at a time, just like everyone else -- but once those pants are on, he mashes baseballs into the San Francisco Bay.