MFP’s Price Says He Wouldn’t Buy Goldman Sachs SharesInyoung Hwang
MFP Investors LLC’s Michael Price said he wouldn’t add to his holdings in Goldman Sachs Group Inc. at the current price because the fifth-largest U.S. bank by assets is trading at fair value.
“I don’t buy it here,” Price, said in a “Bloomberg Surveillance” television interview with Tom Keene and Sara Eisen today. “It’s fair value.” He said, “You buy things when people are selling and you sell when the sun is shining.”
Price, who made his reputation as a value investor in the 1980s by buying shares of beaten-down lenders, owned a $4.5 million stake in Goldman Sachs, according to a September regulatory filing. The New York-based firm rallied 4.1 percent yesterday, the most in 10 months, after reporting quarterly profit that beat analysts’ estimates and full-year revenue grew for the first time since 2009.
Goldman Sachs shares are trading at about 10 times earnings and 1 times book value, Price said. The bank reported yesterday that fourth-quarter earnings more than tripled to $5.60 a share, surpassing even the highest estimate of 26 analysts surveyed by Bloomberg.
“They’re the smartest guys in the room,” Price said. “When you’re looking at financials -- banks, brokers, insurance companies -- who’s going to be smarter than Goldman? And you don’t want to pay more than one times book and 10 times earnings. That to me is the center point.”
While Price doesn’t own shares of Dell Inc., he said the chances of a leveraged buyout for the personal-computer maker are greater than 50 percent. The company is in discussions with private-equity firms including Silver Lake Management LLC, Bloomberg News reported on Jan. 14.
A tender offer for the company could be about $14 to $15 a share, Price said. Dell shares have surged 16 percent to $12.61 this week.
“This is the time to do it,” Price said on Dell’s potential buyout. Hewlett-Packard Co.’s “probably too big to do. Dell is big, but not too big, to do,” he said.
Price said he owns shares of Citigroup Inc., the third-biggest U.S. bank, and foreign-exchange broker FXCM Inc. He is also bullish on McGraw-Hill Cos., the educational publisher and financial services provider that is planning on splitting its two businesses.