New York (HedgeCo.net) – The third quarter was a tough one for the market as most investors know and it was tough on the hedge fund industry as well, even if the industry didn’t drop as much as the overall market. Between the market decline and the increase in volatility, trading activity slowed down for hedge funds as some decided to move cash to the sidelines. These actions led Goldman Sachs (NYSE: GS) to issue a disappointing earnings report.

Goldman reported earnings of $2.90 per share, but analysts expected the company to earn $2.91 for the quarter. In the third quarter of 2014, the company earned $4.57 per share. While the earnings dropped sharply, the bigger problem came on the revenue side of the report as analysts expected the company to generate $7.13 billion in revenue while they actually only generated $6.86 billion.

Goldman stated that revenue from fixed income, currency and commodity trading fell to $1.46 billion, a decline of 33% on a year over year basis while equities trading rose by 9% to $1.75 billion. While the volatile equities environment helped that revenue stream, the other trading areas slowed as investors moved money to the sidelines.

Rick Pendergraft
Research Analyst
HedgeCoVest