CHICAGO, June 12, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The Goldman Sachs Group Inc. (NYSE:GS), State Street Corporation (NYSE:STT), Citigroup Inc. (NYSE:C), Bankof America Corporation (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday's Analyst Blog:
Goldman to Vend Hedge Fund Unit
According to Financial Times, The Goldman Sachs Group Inc. (NYSE:GS) is on the verge of selling its hedge fund administration business to State Street Corporation (NYSE:STT). The deal is expected to be closed at the end of this month, though no agreement has been reached.
Upon closure, the combined business would have $700 billion worth hedge funds under administration. Currently, Goldman's hedge fund unit has $200 billion of assets.
Moreover, Goldman has more than 500 hedge fund clients and about 250 employees worldwide, working from big offshore centers. On the other hand, State Street's fund administration business has assets worth $500 billion.
Hedge funds are portfolio of investments using highly developed investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the aim of generating high returns. Valuation of hedge funds is calculated as a share of the fund's net asset value.
Hedge fund administration involves the process of valuing portfolios and reviewing levels of risks related to investments. In last few years, hedge funds business has grown drastically in the U.S. with the employment of third-party service providers on a wide range.
According to the Securities and Exchange Commission (SEC) filing in May, Goldman has also stepped forward to comply with the Volcker Rule, which is anticipated to be implemented on July 21, 2012.
The Volcker Rule, a specific section of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires banks to restrict their investments in hedge funds and private equity funds. Proprietary trading is also prohibited under this rule.
Implementation of the Volcker Rule would affect the overall earnings of banks. Goldman earns management fees and incentive fees for providing investment management services to private equity and hedge funds. The bank also invests in funds, which yield gains or losses on sell-off. Such earnings of Goldman would be impacted by the Volcker Rule and therefore, the bank has decided to divest its hedge fund administration unit.
Goldman is going to abide by the Volcker Rule by selling part of its investments in hedge funds. The bank has redeemed $250 million worth hedge funds during the first-quarter 2012. Further, it plans to redeem approximately 10% of certain hedge funds every quarter through June 2014.
Apart from Goldman, many other U.S. banks, such as Citigroup Inc. (NYSE:C), Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), etc., are also trying to reduce their investments in hedge funds and private equity. These banks are considering a number of options to go along with the rule.
Goldman currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Further, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
SOURCE Zacks Investment Research, Inc.
Share this article