Goldman Sachs: Berkowitz In! Blankfein, Out? (GS)

Goldman Sachs Group Inc. (NYSE: GS) has become thought of as Darth Vader’s Empire for the public of late.  Still, investors are torn over whether to Buy or Sell Goldman Sachs’ as a stock.  If you are a star-chaser, meaning you chase the investment ideas of star portfolio managers as a piggy-back ride, then half of tonight’s news will lead you into the stock.  The other half of the news might spook some loyalists, and others might call it a coin toss.  Tonight’s news has none other than Bruce Berkowitz of the Fairholme Fund (FAIRX) taking a stake in Goldman Sachs because he believes the self-off is overdone.  The second half of the story is that the rumblings about Lloyd Blankfein’s future are heating up.

The size of the Berkowitz stake in Goldman Sachs depends upon where you read.  StreetInsider.com called it a ‘giant stake’ in the firm.  Morningstar.com noted that “details were scarce, including the type of investment taken, the size, and when Berkowitz bought shares…”

The Wall Street Journal is the one bringing up Blankfein’s future, but the article is a “What-Ifs” note discussing if Blankfein “can survive the legal and public-relations storm…”  While it said that conversations are informal, there do not seem to be any imminent plans and there is some talk about splitting up the role of Chairman and CEO at Goldman.

If Blankfein left, it would be interesting to know if he bought or short-sold Goldman Sachs’ stock as the board of directors was informing him of the decision for him to go.  Buffett defended Blankfein very aggressively over the weekend, and he is not exactly getting the automatic benefit of the doubt from the public.

Goldman shares closed down only $0.05 at $149.45 on a day with a horrible stock market tape.  To top it off, the after-hours session as of the 8PM close out had Goldman shares trading up $0.35 at $149.80.  This is what makes a ballgame.  Two teams, two opposite bets.  One winner, one loser.

JON C. OGG