Bloomberg reports today that while most banks are offloading their hardest-to-value loans, Goldman Sachs is stepping up and taking advantage of the fire sale:
Goldman Sachs Group Inc., the most profitable securities firm, reported an increase in harder-to- value assets during the first quarter, exceeding those at Morgan Stanley and Lehman Brothers Holdings Inc.
Goldman’s share of Level 3 assets surged 39 percent to $96.4 billion at the end of February from $69.2 billion in November, according to a filing with the U.S. Securities and Exchange Commission today. The ratio of Level 3 to total assets rose to 8.1 percent from 6.2 percent.
Buy Low Sell High. Is it any wonder they’re the, “most profitable securities firm?”
The biggest increase in the hard-to-value category was a 59 percent jump in derivative contracts, according to today’s filing. Mortgage and other asset-backed loans and securities increased 56 percent in the quarter.
“Just because an asset is defined as Level 3 doesn’t mean we’re uncomfortable with the value of the asset,” said Lucas van Praag, a spokesman for Goldman Sachs. “It also doesn’t provide any insight into the relative risk of the underlying asset.”
Goldman’s basically saying, ‘when you’re buying for pennies on the dollar you’ve got a decent enough margin of safety.’
Goldman: I like your style…
Source:
Goldman Sachs Level 3 Assets Jump, Exceeding Rivals
Yalman Onaran
Bloomberg.com