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6. The Goldman Sachs Group, Inc. (NYSE:GS)

Number of Hedge Fund Holders In Q3 2024: 72

The Goldman Sachs Group, Inc. (NYSE:GS) is one of the most well-known investment banks in the world. The bank’s income is dependent on interest and market-making operations, which allow it to benefit from different economic climates. As of H1 2024, 63% of The Goldman Sachs Group, Inc. (NYSE:GS)’s pre-expense revenue was from interest while the remainder came from market operations. The firm’s shares jumped by a strong 13% after the US election, as investors anticipated improved stock market activity to help mega banks. The Goldman Sachs Group, Inc. (NYSE:GS)’s shares are up 56% year-to-date as the bank has benefited from shutting down its loss-making consumer banking division and refocusing on investment banking which benefits from growing stock market activity in the wake of lower interest rates. The catalysts from investment banking were evident during The Goldman Sachs Group, Inc. (NYSE:GS)’s third-quarter earnings when the firm reported a 20% growth in its investment banking fees to $1.87 billion.

During the Q3 2024 earnings call, The Goldman Sachs Group, Inc. (NYSE:GS)’s management commented on investment banking and other markets that benefit from looser capital conditions:

“First, we have a Global Banking and Markets business, and you can go look at the performance over the last five years of that business and the returns that, that business has delivered. I would say that I still believe we have some tailwind dynamics around the investment banking activity, and I just highlight that while investment banking revenues have improved, and we’ve made progress, we are still not operating at 10-year averages in M&A and equity volumes.

M&A volumes year-to-date are 13% below 10-year averages. Now that’s better than the 25% below 10-year averages that they were for the first nine months of last year and equity volumes at 27% below 10-year averages. Now that’s better than the 34% to 35% that they were below 10-year averages for the first nine months last year. But there’s no reason why we’re not going to get back to 10-year average is a tailwind, but you can look at the performance in banking and markets, and that’s one building block in the foundation for mid-teens returns. The second is our continued progress, which requires more time and more execution on our part around Asset and Wealth Management. And while we’ve improved the margins, we still have work to do on the margins and also the returns, and we continue to be very focused.”