Reporting by the Financial Times suggests Goldman Sachs is lagging behind its main competitor, Morgan Stanley. Shares in Goldman trade at 1.1 times book value, compared to 1.7 times for Morgan Stanley.

Why should we care?
Goldman’s investors have mixed feedback about CEO David Solomon’s performance, who took the helm at the banking and financial services giant in 2018. Solomon has cut more than $1B in costs and encouraged greater cross-pollination, but newer initiatives, like Goldman’s consumer-banking business, Marcus, have fallen short of expectations. Morgan Stanley has boosted its business through major acquisitions. “True transformation will be hard organically,” said Christian Bolu, a banking analyst at Autonomous Research. “And we know that from looking at Morgan Stanley, you don’t have to go that far.” Goldman, meanwhile, has shied away from the same strategy, in part because its investors view acquisitions as a low priority, and because its sub-optimal stock value would force it to conduct all-cash buyouts. The acquisitions Goldman has carried out have been productive: The firm’s €1.6B purchase of Netherlands-based NN Investment Partners has let Goldman understand how to better integrate new subsidiaries into its larger business. If Solomon can convince investors, then we should expect Goldman to conduct other acquisitions in the medium term, especially if a recession occurs and it can buy challenger businesses at a discount. With Goldman’s fintech-driven relationship with Apple being far from stable, furthermore, Solomon may look for other promising gateways for growth through consumer banking.