Goldman Sachs May Grow by Shrinking: Street Whispers

Goldman Sachs wants to get its stock back to pre-financial implosion levels. But rather than planning to boost shares in ways that earned the bank its “Vampire Squid” moniker, Goldman may be looking to pull a market slight of hand by buying back stock and reducing its public float to match a post-bust earnings outlook.

The investment bank has been apologizing lately to shareholders about its single digit return on equity (ROE), a measure that tells how fast the bank can grow its accumulated earnings.

“While we’re trying to pare down and perform as well as we can in this difficult environment, these aren’t returns that are acceptable to us or to our shareholders, and we know that,” David Viniar, Goldman’s chief financial officer, said of the bank’s ROE in a July earnings call.

Source: The Street