Is Global Alpha bringing Goldman down?

Total Bummer! Global Alpha, Goldman’s mega-posh $10 billion hedge had a sucky August, losing nearly 10% of its value, according to a preliminary draft of a letter sent to investors in the fund. Not only is the fund's poor performance a blow to Goldman's supersavvy rep, it raises the question, did G-man make rotten bets with its own cash, which then contributed to its decline in third-quarter profit? Even if said results beat analyst expectations.

From the get-go G-man reported a slight decline in quarterly results. That ended a streak of record-breaking earnings numbers. While the firm doesn't release Global Alpha's contribution to the bottom line, it is almost certain that the fund's lackluster performance in August had an effect on results. Goldman Sachs Asset Management, the unit that houses Global Alpha, reported net revenue -- revenue minus interest income, a standard measure among brokerage firms -- of $918 million, down 4% from the second quarter but up 26% from the year-ago period. A G-man spokesman declined to comment.

Just in case you wondered, Global Alpha, until recently was virtually unknown on Wall Street, is Goldman's crown jewel in a family of alternative investments that have helped boost earnings at Goldman in recent quarters. While Global Alpha is a relatively small contributor to Goldman's net revenue, the loss is notable because it occurred across many different trading strategies. It is unusual for a hedge trading in diverse markets to have so many lousy bets at the same time.

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