NEW YORK Goldman Sachs Group Inc on Monday said first-quarter profit rose as the bank's traders generated outsized gains thanks to volatile and less crowded markets.
Goldman, whose earnings healthily beat forecasts, also said it planned to raise $5 billion through a secondary share offering and that it would use the proceeds, plus additional funds, to repay funds accepted last year from the government's $700 billion Troubled Asset Relief Program.
The following is reaction from industry analysts and investors:
MICHAEL HOLLAND, HEAD OF NEW YORK INVESTMENT FIRM HOLLAND & CO
"Once again (Goldman) surprised to the upside, and as the quintessential survivor of the Wall Street storms. It's classic Goldman."
"It's an important first step in the next part of the journey for these companies, in terms of companies that run their businesses well will continue to separate themselves from those who haven't."
MICHAEL JAMES, SENIOR TRADER AT REGIONAL INVESTMENT BANK WEDBUSH MORGAN IN LOS ANGELES
"I think just about every metric that they reported was better than what most people's expectations were. The key thing for investors now is how is the stock going to trade tomorrow."
"Obviously the expectations were pretty high going into it, they delivered a pretty solid quarter."
"I don't think it was a surprise that they announcened a secondary offering, there was some talk of that on Friday in The Wall Street Journal."
"People weren't necessarily concerned that they would report a good number, it's just a matter of what the guidance looks like, which we haven't seen yet, and how the stock price reacts tomorrow."
MATT MCCORMICK, BANKING ANALYST & PORTFOLIO MANAGER, BAHL & GAYNOR, INVESTMENT COUNSEL, CINCINNATI, OHIO
"The volatility and market swings have been very profitable for Goldman -- they have been the chief beneficiary of this market snapback. Spreads are humongous and the high volatility has been beneficial to their prop trading."
"Goldman is one of the main drivers of the market, so when things are good, they're like a machine humming on all cylinders."
STEVE CLAUSSEN, CHIEF INVESTMENT STRATEGIST AT ONLINE BROKERAGE FIRM OPTIONSHOUSE IN CHICAGO
"It is kind of a surprise regarding the timing of the release. The stock had a tremendous run over the past five sessions and even though Goldman's earnings came in quite a bit better than expected, it appears that this is a classic case of buy the rumor and sell the news. In the last two trading sessions, the stock has been up over $15 in total. So perhaps the positive impact of these good earnings was already baked into the price. Goldman option premiums indicated a 10 percent swing in the stock price between now and April expiration on Friday."
KENNETH CRAWFORD, SENIOR PORTFOLIO MANAGER, ARGENT CAPITAL MANAGEMENT, ST. LOUIS
"Given at least for now the fairly negative view of TARP, if the company can come out of that program sooner than later it would be embraced by the market. Being free and clear to run operations as the company deems fit I think would a positive in the minds of investors."
KEITH WIRTZ, PRESIDENT AND CHIEF INVESTMENT OFFICER OF FIFTH THIRD ASSET MANAGEMENT
"Goldman may provide all the other companies with a road map on how to separate from the government. Removing the government from your back is great positive news."
"The simple fact that they doubled expectations is really great news. It's another sign, another brick on the wall that the financial sector has gone through the worst."
GARY TOWNSEND, CHIEF EXECUTIVE OFFICER OF HILL-TOWNSEND CAPITAL IN CHEVY CHASE, MARYLAND
"They are spectacular, it far exceeds any estimate that I'm aware of."
"It just shows the resiliency of the American financial system. This, combined with the pre-announcement from Wells Fargo on Thursday puts the lie to the whole argument that the U.S. financial system is insolvent and needs to be nationalized."
"I think for them the principal issue is going to be how much of the market they are seizing in the absence of competitors that have fallen by the wayside. What we are seeing here is the competitive advantage that Goldman has, asserting itself as others have disappeared."
(Reporting by Elinor Comlay, Leah Schnurr, Phil Wahba, Doris Frankel, Paritosh Bansal and Juan Lagorio)