Once called “Golden Slacks” by Jim Cramer, the leading Wall Street investment bank is a different company today than the one so famous for enriching its principals.
David Solomon, chairman and CEO of Goldman Sachs (GS), talked with Cramer on a recent episode of the Mad Money TV show. Shares have lagged its peers and now trade with some of the lowest price to earnings ratios in the S&P 500.
Solomon explained that the company's key mergers and acquisitions business is a broad category, and while there are some regulatory headwinds in some areas, like big-cap technology, smaller, bread-and-butter deals are still going strong.
Real Money’s technical analyst Bruce Kamich recently wrote that Goldman’s stock chart is troubling.
In a daily bar chart of the stock “we can see that prices have been rolling over and weakening the past nine months,” Kamich wrote recentlly. “This is a significant top and typically means we are going to see a significant decline in the months ahead.”
Solomon acknowledged to Cramer that the company needs to do a better job explaining its strategy to investors. That strategy included strengthening their core businesses of capital markets, investment banking and trading, all of which he said have meaningfully expanded over the past year.
The second part of Goldman's strategy includes investing in four areas of growth, especially their digital consumer platform. That platform, which includes partnerships with Apple (AAPL) and General Motors (GM), has over 10 million customers and has brought in $100 billion in deposits to Goldman.
Goldman continues to invest in these growth areas, but Solomon told Cramer that if there aren't enough opportunities, they will return more capital to shareholders through dividends and share buybacks.
