The downward spiral in the stock price of Goldman Sachs (NYSE:
GS) may have started in France. Yet investors who waited
to know what happened would have lost 25% of their money
over the first six months of 2010.
Chart Courtesy of StockCharts.com
The market acts in mysterious ways, but the charts don't
lie. And the 25% price decline in shares of Goldman Sachs
seems to be at least partially related to selling by French
insurance giant Axa, at least according to SEC documents
and a report by AFP.
According to reports, Axa sold 14 million shares of Goldman from January to June
of 2010, cutting its stake from 4.8% of Goldman to 2.8%. The beneficiary was
Wells Fargo, to whose shares Axa shifted the proceeds from the Goldman sales,
among other U.S. financial entities, according to the AFP report. Others sold
Goldman shares as well, including U.S. money managers Blackrock and mutual fund
family T. Rowe Price.
To be sure, Goldman, which according to "The Big Short" had a central role in
the subprime market crisis, has had its share of problems. The company settled
with the SEC and had to set aside hundreds of millions to pay U.K. taxes on bonuses,
which cut their last quarter's profit by 82%. There is also the question about
whether the current market can bring back trading profits, and whether trading
is even going to be a central piece of Goldman in the future.
We're writing this article for two reasons. One is that the stock is way down
and that it may be oversold enough to consider. The other is that a few weeks
ago we noticed, in this space, that someone with big money was clearly selling
the stock. That validates chart analysis as a useful piece of information. We
didn't know who was selling. But it was clear someone big was selling big chunks
of stock.
What's our point? It's often better to act on the charts than to wait to know
what's happening. And in this market, that makes more sense as each day passes.
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