Is Goldman Sachs Still the General?

Last week I recommend a bull put spread in Goldman Sachs (GS) because I felt the market leader and best-of-breed “trader’s bank” would continue to make gains as it targeted the $200 mark this year. But the price action has been weaker of late with the stock not regaining its October highs above $190 even as the S&P 500 has made new highs above 1,100.

And this week we have CEO Blankfein making headlines for two public gestures. The most prominent would be his announcement that GS is joining forces with Warren Buffett to provide $500 million in funding for education and small business initiatives. The less important, though as much discussed, is his off-the-cuff apology for the firm’s participation in financial practices that helped feed the crisis of 2008.

Much will be written about the great institution and whether or not it could have been greater when it had the choices. On October 16, David Pauly writing on Bloomberg.com suggested many other uses for Goldman’s $20 billion in bonus dollars, like sharing them more equitably with all the firm’s employees, increasing their “paltry” dividend, or buying another bank. Today on Bloomberg, Mark Gilbert says that “Goldman’s $500 million Is a Day Late, Dollar Short.”

Are Blankfein and company getting cute with this philanthropy to patch up things on the PR front? I don’t care. They are one of the best bank-trading institutions ever to bank or trade. They are not perfect in every way, just excellent in the ways that count most. This may not keep the share price of its stock from falling below $170, but it will certainly make me a buyer of the company at lower levels.  And in the short-term, I am staying with my December bull put spread as long as the stock holds above $175.