Goldman Victory on a MAKO Miss
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If I ever buy so much as a single share of stock in a company based on the recommendation from a Goldman Sachs (NYSE: GS), analyst, I would request that you punch me in the stomach repeatedly, once for every dollar spent (plus commissions). If I ever make a suggestion to anyone of you, or ever rationalize any sort of position because someone from Goldman Sachs mentioned it, you have permission to laugh in my face and take away my weekly trading allowance for an entire quarter.
Instances like MAKO Surgical Corp (NASDAQ: MAKO), and the Goldman buy recommendation at $23, after their previous disappointing call, followed by a subsequent sell recommendation after market close yesterday, only perpetuate the investing public’s sentiment that the entire game is rigged, nobody is looking out for the little guy, and that Goldman Sachs’ analysts were inspiration for the vampires on the HBO series, True Blood.
After MAKO reported a miss last quarter, the stock dropped off a rather steep cliff, from $41 to $26, May 7th to May 8th. The stock remained relatively flat prior to the Goldman guillotine that was the catalyst for the sell-off this morning. The stock price closed yesterday at $24.61, so Goldman can declare “victory” with their recommendation at $23 per share. Good for you. Enjoy your home run title, Barry Bonds.
I understand that Goldman wasn’t the only one on the Street recommending MAKO, I received more than one recommendation from a publication I receive monthly (their suggestion was a buy rating December, 2011 just under $30, with a stop at $24.50). And I respect the reality that not every call is necessarily going to turn out to be a winner. I have a portfolio or two that contain holdings in dire need of a tourniquet. The act that is most vile in this instance is the fact that had John Q. Investor attempted to exit their position with MAKO after hours, well, good luck. Most “normal” individual investors don’t have the ability to do so.
So I sit here and seethe through my shame in owning shares of Goldman Sachs. It’s true. I am extremely embarrassed that I own shares of such a blood-sucking parasite. It’s situations like these that give volume to the voices of the Occupy Wall Street movement. If the protestors had a common voice, rather than strength in numbers (99%), if they had an actual agenda with possible solutions to the problems, rather than face-painting, drum-beating and filling public spaces with the odor of patchouli, perhaps their cries would have actually been heard and carried on. Civil War reenactments are far more organized.
This recent example of market chicanery is the very reason why so many people in the business preach the message of due diligence. Even market pros get it wrong, from time to time. And some of them don’t make it any easier by dancing a fine line between the bells and in after-hours activity. You can never possess too much information, and if you ever have any second thoughts about owning a stock, you should seriously consider selling it. Better safe than sorry.
Motley Fool blogger Kyle Metivier owns shares of Goldman Sachs and has no position with MAKO Surgical.