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went public several years ago so that it could have greater access to the public markets and unlock value to its then longstanding partnership. That value was unlocked, some partners have cashed out, and now the company is selling for a discount to its book value. I thought that Jim Cramer made some excellent comments to that effect last night on
Now there is the U.S. Treasury and Warrant Buffett who stand ready to throw money at GS. Who needs the capital markets? There is simply no reason why GS in my mind would want to remain a public company at this juncture.
In order to go private, the price paid to current shareholders would have to be significantly higher. With a current market value of $30 billion, even paying $50 billion for the company would not cost that much, as there is still a good chunk of the company that remains in employee and former partners' accounts. Those individuals would likely become part of the new private company. Furthermore, with the U.S. government standing ready to inject capital into GS, there is ready financing available to make the deal happen.
Goldman should not stop there. They should buy a bank. It could be a simultaneous transaction -- buy the bank, and go private. This can all be achieved with U.S. government bailout money. I wrote more about this on my blog
on Sept. 24, 2008 (which you can access from the archives), after GS did the deal with
. Warren Buffett may be another source for the "buy a bank and go private" strategy. An update on those bank targets:
New York Community Bank ( NYB) : market cap $4.7 billion
Hudson City Bancorp : market cap $8.4 billion
M&T Bank : market cap $8.1 billion
Valley National Bancorp : market cap $2.4 billion
VLY or NYB could be the best bets. GS co-president Jon Winkelried (and his wife) went to school with my wife (maiden name: Layni Horowitz), and his kids went or still go to school with my kids. We live in the same town. However, we never met. So, Jon, please don't be a stranger and give me a call. We can talk more about my ideas.
At the time of publication, Rothbort was long Goldman Sachs, although positions can change at any time.
Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational Web site
Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.
Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.
For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at
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