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Goldman Sachs ( GS) is the class leader among investment banks, a perennial winner in a group of overachievers.

But Goldman Sachs isn't your typical financial institution: It's a hedge fund masquerading as a "bank holding company," and its profits are derived from risky bets.

TheStreet.com Ratings

Shares of Goldman Sachs, rated "hold" by TheStreet.com Ratings, have declined 36% over the past year, outperforming the S&P 500 index and industry competitors such as Morgan Stanley ( MS) and Citigroup ( C). Former rival Bear Stearns has been absorbed by JPMorgan Chase ( JPM), and Lehman Brothers is defunct.

Just three months after posting its first quarterly loss since going public a decade ago, Goldman Sachs returned to profitability. First-quarter earnings per share were $3.39, trouncing analysts' expectations. Investors have sent the stock up 65% since the market rebound began March 9. But Goldman Sachs isn't a safe stock for most individual investors. The New York-based bank's disclosure is opaque and its business model is founded upon volatility.

Almost $6.6 billion, or 70%, of quarterly revenue came from Goldman Sachs' FICC unit, which stands for Fixed Income, Currency and Commodities. The division takes bets from clients and charges a fee, and also places bets with its own money.

This is the engine of the Goldman Sachs profit machine: speculating where the market (or markets) is heading. But there is no transparency on how the banks' traders are placing their bets, who is placing them and how much they are betting.

Goldman Sachs' value-at-risk in the first quarter rose to $240 million, about nine times more than at JPMorgan. Value-at-risk is the sum that a bank thinks it could lose from trading in a single day.

The reason for this lack of disclosure is simple: Goldman Sachs prides itself on attracting and retaining top Wall Street talent. If the company divulged trading strategies, profit-making opportunities would evaporate. Goldman Sachs' talent doesn't come cheap, either. The company's largest expense is compensation and benefits, which burned through $4.7 billion, or 50%, of quarterly revenue.

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