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Many investors look for specific catalysts when it comes to the stocks they buy, and that's a practice I encourage – especially when there's a regime change at the very top.
Because a change of leadership can be extraordinarily profitable.
Today we're going to talk about what's happening at The Goldman Sachs Group Inc. (NYSE: GS), along with a trade that could set you up for some pretty juicy profits by Thanksgiving…
Let's start with David Solomon.
He's the firm's new CEO, and he takes "the chair" from current CEO Lloyd Blankfein on Sept. 30, only nine days from now. A political science major out of Hamilton College, Solomon's taken a circuitous route to the top that's included stints at Drexel Burnham Lambert, where he sold junk bonds and commercial paper, and time at Bear Stearns, where he rose to prominence running the investment banking division.
Solomon jumped to Goldman in 1999 where, again, he rose through the ranks and made hay in the investment banking unit. According to CNN, the investment banking unit's sales jumped 70% during his tenure.
Goldman promoted Solomon to president last year in a move that put him side-by-side with Harvey Schwartz, who subsequently resigned last March. And, in doing so, he all but made Solomon the heir-apparent.
Solomon is as unconventional as he is bold, and I think that's a real advantage at a time when the firm needs dramatic change.
Not many people know this, but Solomon moonlights as "D-Sol" on the electronic dance scene, and claims more than 425,000 monthly listeners on Spotify. His single, "Don't Stop," was released this past June, and it's a very catchy remake of the 1977 Fleetwood Mac original, if I do say so myself.
Anyway, back to the trade setup.
I think Solomon will quickly remake Goldman Sachs in his own image.
He's certainly not letting the moss grow, naming Stephen Scherr as CFO – which returns current CFO Martin Chavez to Goldman's trading division – John Waldron as president, and Tim O'Neill as its vice chairman.
These and other moves tell me that Solomon's got three things on his mind: a) further expanding into consumer banking, b) pushing deeper into commercial banking, and c) expanding Goldman's client "footprint."
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All four men have deep roots and experience in investment banking, so this is a marked departure from the trading-centric cabal that's run the firm for decades. It's also a change in direction because investment banking is a relationship-driven business, characterized by personal knowledge and experience as opposed simply to revenue, which is typically the case for firms driven by trading.
I think this will result in entirely new levels of profitability that blow by the $5 billion revenue growth plan implemented in 2017. And not a moment too soon.
Goldman has lagged behind peers like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp. (NYSE: BAC), and Morgan Stanley (NYSE: MS) in recent trading. Which means this is a classic turnaround play that's almost completely unrecognized by the Street, as I type.
A quick look at the charts makes that very evident…
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean, and he's also the founding editor of Straight Line Profits, a service devoted to revealing the "dark side" of Wall Street... In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.