2. Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 71
Goldman Sachs Group, Inc. (NYSE:GS) looks undervalued, with a P/E (price to earnings) ratio of 5.81. The recent Federal Reserve Stress Test showed that the banking firm also has one of the most impressive balance sheets of all the major banks in the United States.
On June 29, BofA analyst Ebrahim Poonawala upgraded Goldman Sachs Group, Inc. (NYSE:GS) to ‘Buy’ from ‘Neutral’ with a price target of $380, up from $360. The analyst did not attribute this upgrade to an improved outlook for bank stocks in general, but rather pointed to Goldman Sachs’ attractive relative risk/reward, and noted that he sees the bank as well-positioned to outperform within a deteriorating economic backdrop.
71 hedge funds were bullish on Goldman Sachs Group, Inc. (NYSE:GS) at the end of the first quarter, with a combined worth of $4.59 billion. In contrast, 75 hedge funds were stakeholders in the firm a quarter earlier. With a $1.12 billion position, Eagle Capital Management was the biggest shareholder of Goldman Sachs Group, Inc. (NYSE:GS) in the first quarter of 2022.
Ariel Investments talked about Goldman Sachs Group, Inc. (NYSE:GS) in its fourth-quarter 2021 letter to investors. Here is what was said:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. The Goldman Sachs Group, Inc. (GS) jumped +47.59% for the year and +1.73% in the quarter.”
