Out Fox The $treet

Summary Goldman Sachs had to resubmit the capital return plan, leaving a lot unknown about the approved stock buyback plan. The investment bank hiked the dividend by $0.05 to a yield of 1.4%. Investors should pay less attention to the stock buyback plan and more attention to the cheap valuation. Of all the major financial institutions, Goldman Sachs (NYSE: GS ) is the one that doesn't disclose the stock buyback plan approved after the Comprehensive Capital Analysis and Review, or CCAR. Though passing the stress test, the investment bank had to revise its capital return plan, leaving most analysts questioning whether it will reduce the stock repurchase amounts of the last couple of years. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Summary Goldman Sachs reported Q4'14 earnings. The stock remains a Strong Buy. The original investment theory of solid yields and huge earnings remains intact.          After the weak bank earnings this week, investors didn't expect much from Goldman Sachs (NYSE: GS ) by the time it reported Friday morning. The bank actually beat estimates, though analysts greatly reduced these estimates from levels of a week ago. Even after the sell off this week, the stock is struggling to gain traction with it trading down around $2.00 mid-day. Again, investors appear more concerned about momentum instead of the valuation proposition of the financial institution. Read the full update at Seeking Alpha.  Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

January was yet another solid month on an absolute basis, with a 3.9% gain for my Net Payout Yields portfolio, but on a relative basis the portfolio underperformed the benchmark S&P 500 that was up 4.4%. Though not unexpected as these large cap stocks will tend to slightly underperform on large up months. For the last 365 days the model continues to greatly outperform the market by outperforming during weak months. Dividend Risks As the market entered 2012, too much focus in the market was being placed on dividend yields with no concept of capital loss potential. As the dividend stocks rose into year end, this created the risk of capital losses in stocks yielding only 3-4%. Investors typically expect and want higher gains for a year. What happens when the stock drops for the year wiping out the benefit of the dividend? This highlights the benefits of a model that focuses not only on dividends but also stock buybacks. The typical stock owned in this model has 60-70% of its ...

Going into this earnings release, investors appeared a lot more bullish on Capital One Financial (COF) than Goldman Sachs (GS). Capital One's stock was trading at 6 month highs and Goldman was near the lows. All the media could focus on was how bad the investment banking and brokerage business was for Goldman Sachs. Management, though, was telling a different story to anybody paying attention. All year Goldman Sachs has been busy buying back stock while Captial One was focused on repaying debt, either signaling that the stock wasn't that cheap or maybe the future wasn't that bright. In our Net Payout Yields Model, these signals were used to switch out of Capital One at the end of December and into Goldman Sachs at the beginning of January. Contrary to the typical opinion in the market about stock buybacks, large caps with strong earnings profiles tend to benefit from buybacks. The media tends to focus on the failures such as Netflix (NFLX) while the winners go unnoticed...

And that assumes the cost won't continue to drop. The Trouble Asset Relief Program (TARP) continues to be scorned by most people costing many backers their political positions, but ironically it has turned into one of the most successful government programs ever. Ok, its very possible that the politicians lost their jobs due to the numerous other packages enacted after TARP that weren't nearly as successful. Anybody hear of any benefits from the stimulus package? Today the Congressional Budget Office (CBO) estimated that the $700B TARP program would only end up costing taxpayers $25B an absurdly low number considering the consternation when it was enacted. Back then lots of focus was on the $700B being a taxpayer cost instead of an investment in the financial system that was about to collapse. In fact, it would've been a lot more successful if the focus hadn't strayed to the weak companies like General Motors (GM) and AIG. Somebody explain to me how GM is back publ...

Very interesting to see the stock of Goldman Sachs (GS) appear headed to a triple top breakout when just about every analyst has downgraded its earnings potential due to reduced trading profits and market activity. Not to mention that the stock is ramping prior to earnings just a week away on the 19th. Also, note the higher lows in the chart pattern suggesting further strength in the stock. The lower moving averages are about to cross the 200ema which is another very bullish sign. Though my portfolios have no position in GS, the stock is a leading indication of financials and the market in general. Right now the stock says the market is headed higher. Our favorites in this general area remain MF Global (MF) and International Assets (IAAC) both of which have been breaking out lately as well.

Looking at a chart of Freeport-McMoRan (FCX) and Copper (HGA) it would appear that Goldman Sachs (GS) is a little late to the party. Not that Stone Fox isn't appreciative that GS is pushing up one of our bigger investments. The stock trades at $83 now, but was available for only $57 when July started. Where was GS then? Not to mention that the new target of $94 doesn't provide that much upside from these levels so trade on this news with caution. Copper has also seen a huge rise and is now attempting to breakout and test the recovery highs around $3.60/lb. So again GS seems to have turned bullish long after a run has begun. Now to be fair, the copper inventory situation has become a lot more bullish over the last couple of months. LME copper inventories continue to plunge on a daily basis from 520k tonnes 6 months ago to 382K tonnes today. GS comments : Goldman Sachs was active in the metals segment on Monday morning. The firm ...

Today's trading was all about clarity. Though the market started weak and it appeared that the 200EMA was going to become major resistance, all of the troubles in this market seemed to clear up within hours. First, BP caps the well and stops the oil from gushing into the gulf. This will improve confidence assuming of course it continues to work and passes numerous pressure tests. Second, Congress passed a Financial Regulation bill that lacks true to punishing power to the industry. While not a bullish bill by any means, its at least done and alot less harmful then feared. Third, Goldman Sachs (GS) settled with the SEC on fraud charges. The fine was only $550M which was considerably less then feared. With GS being such a market leader, this settlement will unleash the stock and one of the leaders that has held the market down since mid April. The clarity on these subjects along with news overnight that China has been successful in slowing down the economy from torrid growth is also ...

Though the major indices floundered today with the Dow even closing down, the better diversified and reflective indexes were up very strong. The Russell 2000 was up 1.8% while the SP400 Midcap was up over 1%. Also, both the Nasdaq and NYSE had solid internals with roughly 70% of stocks up today. Honestly not sure what to make of a market where the average stock soared while the huge mega caps were basically flat to down. The Russell 2000 had a solid bounce off the 200EMA which would normally be very bullish. The SP500 closed another poor week closing below the 200EMA. Most of the smaller caps appear to have broken the downtrend with former leaders like Goldman Sachs (GS) and Freeport McMoRan (FCX) breaking above the 20EMA while recent leader Apple (AAPL) struggled. With FinReg basically done and China leading towards a soft landing its very possible that these past leaders regain there form. The real question is whether AAPL along with other techs will keep recent gains. Or are we just...

Naturally the Goldman Sachs (GS) fraud case has dominated the news over the weekend especially in Europe as governments officials in the UK and Germany jump on the shoot first read the details politics. As I type this the Asian markets are down close to 2% so basically in line with the US. Based on that it doesn't appear that the markets will be any further impacted by the news. The US futures are slightly down so it's possible the markets will begin lower Monday, but if it doesn't trade down lower then Fridays lows (SP500 1,186) its very possible that we'll see a rally into the close. The general media hpye is this leads to the much needed correction. Will the market drop 10% or more? Its possible that this leads to tougher financial regulation especially if most people fall for the mis-informed headlines. Rather it seems illogical that a trade from over 3 years ago that isn't even part of the financial markets anymore causes lasting damage. A game changer needs to...

While the news seemed horrible today with the SEC announcing fraud charges against Goldman Sachs (GS), the news is already turning very questionable for the SEC. Its difficult to fathom how the SEC will be able to isolate one transaction from GS and get that to stick. All of the parties in this deal were very sophisticated and knowledgable. No indication exists that they were intentionally misled. Just about everybody thought the housing market would never decline and hence irrational investments were made. If anything, the rating agencies and regulators remain as the main culprits for the blowup of the markets not GS. After the bell, news has come out that not only did GS lose $90M on the questioned deal, but Deutsche Bank (DB) lost $500M. Both banks were instrumental in working with John Paulson to structure these deals that he shorted. The SEC believes the intent was to defruad the buyers in this case. According to GS they lost $90M in this transaction because they accepted residu...