Hedge Fund's Goldman Sale Was Overhyped

Breathless reports in recent days about a prominent European hedge fund’s sale of its Goldman Sachs stake have done little to the bank’s shares Monday, and for good reason: it’s old news.

The Goldman Sachs booth on the floor of the New York Stock Exchange
Getty Images
The Goldman Sachs booth on the floor of the New York Stock Exchange

Over the weekend, a British newspaper reported “for the first time” that Lansdowne Partners, the London hedge fund that manages $16 billion in assets, had sold off its entire stake in Goldman , at one point worth roughly $850 million.

Calling the sale a “blow” to the firm, the article, which appeared in the Telegraph, added that Lansdowne’s sale partly reflected concerns that the U.S.’s new Volcker Rule, still being fleshed out as part of last year’s Dodd-Frank financial regulatory-reform act, would crimp trading profits too drastically. Early Monday, the New York Post picked up the story.

Goldman shares opened higher in the morning, but lost steam during the course of the day, trading at about $134 by the last hour of Monday’s trading day.

As it turns out, Lansdowne did, in fact, sell its entire Goldman position during the first quarter of the year, a fact that was reported in public filings in May (and reiterated by Reuters on Monday). At least one outlet, the Dow Jones Newswires, picked up on the sale at that time.

But a person close to the hedge fund said that the Goldman sale was motivated by a desire to rotate out of the former U.S. investment banks and in to the country’s larger, more universal banks, rather than a fear that Goldman’s business would be less profitable as a result of regulatory reform.

Indeed, Lansdowne now has large positions in a handful of U.S. commercial banks—including a Wells Fargo stake valued at roughly $895 million and a J.P. Morgan stake valued at about $564 million, according to recent filings.

It also has a small position in Morgan Stanley .

A Goldman spokesman declined to comment, and Lansdowne CEO Paul Ruddock referred a call to a spokesperson.

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