Goldman's Golden In Fourth Quarter

Dec 12 2006 | 1:52pm ET

What, Goldman Sachs worry? The largest hedge fund manager in the world need not hit the panic button just yet because it has other lines of business to fall back on.

Goldman Sachs nearly doubled its earnings for the fourth quarter despite experiencing drawdowns in its flagship hedge fund. Its eye-pooping $3.15 billion in net income for the three months ending Nov. 24 resulted primarily from increased trading and underwriting revenue, as well as profitable investments in Asia.

“You should expect a significant decline in incentive fees in the first quarter, and over the course of the year, you should expect a significant increase in asset-management fees,” as money continues to pour into Goldman’s hedge funds despite the poor performance, CFO David Viniar said in a conference call. Management fee revenue rose by one-third in the fourth quarter, boosting revenue at Goldman’s asset management division by 19%.

 The $10 billion Global Alpha fund is down by double digits this year, contributing to a 78% drop in performance fee revenue.

Goldman was founded in 1869 and is headquartered in New York with offices in London, Frankfurt, Tokyo, Hong Kong.


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