Where Will Goldman Sachs Go Next?

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With shares of Goldman Sachs (NYSE:GS) trading around $156, is GS an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Goldman Sachs is engaged in investment banking, securities, and investment management. It provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments, and high net worth individuals. The company operates in four segments: investment banking, institutional client services, investing and lending, and investment management. Through its segments, Goldman Sachs provides valuable investment services to consumers and companies worldwide.

Federal regulators are scrutinizing Goldman Sachs’s high-frequency trading operations, the latest crackdown on what the government sees as potential market manipulation by some of Wall Street’s biggest banks. In recent months, federal authorities have ramped up their scrutiny of high-frequency trading, a general term used to describe methods by which firms can buy and sell stocks ahead of other investors. In April, Attorney General Eric H. Holder Jr. confirmed that the Justice Department was investigating high-speed trading “to determine whether it violates insider trading laws.” Eric T. Schneiderman, the New York attorney general, has called the practice “Insider Trading 2.0.” Goldman disclosed that it was under investigation in a regulatory filing on Friday but did not identify by which agency. The filing also confirmed that the bank was under investigation for potential violations of the Foreign Corrupt Practices Act, including its hiring practices abroad. In addition, Goldman said in the filing that it expects its litigation expenses to remain “high” and disclosed that it had increased its reserves to pay for legal expenses to $3.7 billion from $3.6 billion.

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