In the Webinar, we liked a GS play we can add to the LTP:
- Sell 5 GS 2021 $140 puts for $12.50 ($6,000)
- Buy 10 GS 2021 $150 calls for $44 ($44,000)
- Sell 10 GS 2021 $200 calls for $19 ($19,000)
That's net $19,000 on the $50,000 spread that's half in the money to start and it's such a high-probability trade that there's no sense in not doing it.
| Year End 31st Dec | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | TTM | 2018E | 2019E | CAGR / Avg | |
| $m | 41,664 | 40,874 | 40,085 | 39,395 | 37,850 | 42,828 | 50,899 | 36,155 | 36,457 | +0.6% | |
| $m | 11,207 | 11,737 | 12,357 | 8,778 | 10,304 | 11,132 | 12,881 | -0.1% | |||
| $m | 7,475 | 8,040 | 8,477 | 6,083 | 7,398 | 4,286 | 5,993 | 9,861 | 9,538 | -10.5% | |
| $ | 14.1 | 15.5 | 17.1 | 12.1 | 16.3 | 19.8 | 25.0 | +6.9% | |||
| $ | 14.6 | 16.4 | 18.7 | 18.4 | 16.9 | 20.1 | 25.7 | 25.1 | 25.1 | +6.6% | |
| % | +186.6 | +12.5 | +13.8 | -1.8 | -7.7 | +18.8 | +27.7 | +24.6 | -0.052 | ||
| x | 8.72 | 6.82 | 7.00 | 7.00 | |||||||
| x | 0.35 | 0.28 | n/a | 0.82 | |||||||
| Profitability | |||||||||||
Last year, GS took a $5Bn tax charge in Q4 as they repatriated some cash (they have $120Bn on hand) and this year I think they'll drop $10Bn to the bottom line against a $65Bn valuation at $175 so miles below fair value. They have an outstanding issue with Malaysia over the scam they were running but, like every other time they get busted – it will likely be resolved with a wrist slap.
