Goldmans Sachs (GS) is staying aggressive by taking principal investments in the tech sector similar to a venture capital firm. While the strategy has worked out quite nicely for Goldman lately I’m somewhat surprised to hear this due to the Basel III guidelines which reduce the attractiveness of principal investments for banks. I would expect Goldman to continue to increase their business in selling shares of tech companies before they go public similar to how they were able to sell shares in Facebook before it went public. That is an attractive business with higher profit margins than the normal securities business, and it deepens Goldman’s relationship with larger clients who are always hungry for access to the hottest investment ideas.
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