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Whitney Tilson Adds To Goldman Sachs Position, Says It's 'Much Too Cheap'

Whitney Tilson Adds To Goldman Sachs Position, Says It's 'Much Too Cheap'

Whitney Tilson is long Goldman Sachs Group Inc (NYSE: GS).

"The financial sector has been hit the hardest by the Brexit vote," Tilson wrote in an email, "so today I'm adding to the only financial stock I own (unless you count Berkshire), which is Goldman Sachs. At the current price of ~$139, it's now trading at a 15% discount to tangible book, which his much too cheap I think."

Tilson highlighted an article from Barron's over the weekend, which echoed his bullish view.

"While the broad market remains fairly close to all-time highs, Goldman recently traded at its May 2006 price, even though its book value per share has roughly tripled since then," wrote Barron's Jack Hough.

Related Link: JPMorgan: Goldman Sachs Will 'Perform Better Than Peers'

"In fact, with Goldman now trading at a sizable discount to its book value, one investment the company can buy cheaply is its own shares, which it’s doing," Hough continued. "Business is far from booming. Revenue from fixed income, commodity trading, and stock underwriting has been weak across Wall Street. But Goldman shares could nonetheless rise 30% over the next year from depressed levels."

The Barron's report concluded, "Wall Street’s average target price for Goldman stands at $185, implying a gain of 30%. The dividend yield is 1.8%. A rise to that price would leave shares 4% below next year’s projected book value, closer to their historical level and to that of rival JPMorgan Chase. Even for a squid, Goldman may have sunk too low."

Shares of Goldman Sachs traded down 2.5 percent at $138.29 Monday morning. The stock has shed about $15 since Thursday's close.


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