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MARKET SAVVY | SAVVY CONFIDENTIAL / A Briefing for
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Goldman Plays to Adoring Crowd

May 05, 1999|Times Wire Services

Newly minted shares of Goldman, Sachs & Co. soared 33% Tuesday in their trading debut, as investors welcomed Wall Street's elite investment bank into the public arena.

The stock, priced at $53 late Monday, rocketed as high as $77.25 on the New York Stock Exchange on Tuesday before closing at $70.38, up $17.38 for the day.

More than 22 million shares changed hands. The offering had totaled 69 million shares.

"They did a great job getting what they wanted," Mark Dawson, a portfolio manager at Rainier Investment Management in Seattle, said of Goldman. "They didn't price it aggressively, guaranteeing it would go up."

The deal, which ends Goldman's 130 years as a private partnership, values the firm at $33.4 billion, ahead of Merrill Lynch & Co. but behind No. 1 Morgan Stanley Dean Witter & Co. and No. 2 Charles Schwab Corp.

At Tuesday's close, Goldman shares were priced at about 20 times estimated 1999 earnings per share of $3.45. By contrast, both Merrill and Morgan Stanley are valued at about 16 times estimated 1999 profit.

Goldman's stock premium "is totally understandable, given the unique status of Goldman," said Dawson.

Demand for the stock was so high that Goldman was able to place shares only with favored institutional clients and its wealthiest private investors. Other money managers who got shares said they received 5% to 10% of what they sought.

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