Richard Bove sides with Goldman Sachs on 'net short' issue


The ubiquitous Richard Bove, a noted bear on Goldman Sachs, has again weighed in on the high-stakes debate over whether or not Goldman Sachs had a net short position on the housing market or just enough of a short position to offset its long positions.

In his most recent note to clients, Bove writes--somewhat surprisingly--that, "It is becoming increasingly apparent that a terrible wrong may have been done to Goldman Sachs. Evidence is now mounting that the company did not have a net short position at a crucial time under study and that the Senate Committee may have misread the numbers."

Bove thus becomes another high-profile analyst to side with Goldman Sachs on this issue. The esteemed New York Times' Dealbook Andrew Ross Sorkin also has weighed in on the side of Goldman Sachs. Bove, however, has not budged from his sell recommendation on the stock. He told the Times that when the vaunted report from the Senate Permanent Subcommittee on Investigations was publicized, Goldman Sachs was quiet, which led him to believe that there was merit to the report.

Since then, the bank has come out swinging, taking the offensive in a bid to turn the tide of influential opinion makers. That effort is now bearing fruit. But this is only one aspect of Goldman Sachs' larger woes. Bove thinks most analysts are way too rosey in their expectations for second quarter earnings, suggesting they need to come down by about a dollar.

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