If there is one skill Goldman Sachs Group Inc. GS +1.20% traders pride themselves on, it is the art of buying low and selling high.
But last year, anticipating new regulatory restrictions on proprietary trading and seeking to reduce the bank's exposure to risky assets, Goldman loan traders unloaded hundreds of millions of dollars of leveraged loans at a loss, people familiar with the matter say. Making matters worse, many of those loans have since jumped in value.
Details of one trade in particular have recently caused a stir in the market. In November, Goldman sold about $85 million of loans in troubled newspaper publisher Lee Enterprises Inc.LEE +1.24% Goldman sold the debt at about 65 cents on the dollar, having bought it months before at around 80 cents, resulting in a loss of at least $13 million.