Junto Posted September 22, 2011 Share Posted September 22, 2011 I have been long since mid-July, but have been averaging down aggressively and building an overweight position in the past two days. MS has a Book Value of Equity at $59.7 billion and is currently trading in the market at just under $25 billion. A $34.7 billion discount. My personal opinion is that it is a round about trade to short the France Banks as it had exposure of $39 billion as of December 31, 2010. Significant time has passed and many changes have occurred since then. Their most recent presentation 9-13-11 describes some of their recent risk management changes to improve their balance sheet since the last crisis (pdf http://bit.ly/nB3vOC). Other Eurozone exposures are very manageable (10-K http://1.usa.gov/oXVBcY) Insiders were buying in early August. Key Positives: - Converted Preffered Stock to Equity last quarter and took a large conversion charge, but the quarterly savings are significant and payback period is respectable - Risk management has been overhalled and improved significantly - balance sheet has improved significantly - Trading at less than 1/2 book - Good earnings potential going forward with low P/E ratio Key Negatives: - Exposure to France - Uncertainty in marketplace - Net Interest Margin contraction across industry - Unknown Unknowns in regard to the broader impact of a Greek default There are other positives and negatives but I wanted to drop a post on the board and get the conversation going. I am at work so the data level detail is marginal. Link to comment Share on other sites More sharing options...
Kraven Posted September 22, 2011 Share Posted September 22, 2011 Agreed. MS is another one of a long list of financials that is clearly not trading at the right price. If everything returns to some level of normalcy then there is no reason for MS not to be trading around book value at least. If the world is going to fall apart then it's probably worthless. I happen to believe in the former. I just can't see a world where we start losing MS, GS, BAC, C, etc. Are they all going down? If so, then the future will be very unlike the past. We can't have a normal economy without the financials. There isn't enough money in the world to recapitalize them all, so at some level either they are all going to work, or none of them will. Just my 2 cents. Added: Obviously this is an overly simplistic observation. There could be a long discussion of the future profitability of the banks, the investment banks, etc. Clearly there are headwinds, whether it be new regulations, the economy, what have you. But every time there is a downturn and the level of deal activity drops or there are new regs, people pronounce the death of the investment bank. Hasn't happened yet. Again, just my 2 cents. Link to comment Share on other sites More sharing options...
Junto Posted September 27, 2011 Author Share Posted September 27, 2011 Certainly positive movement lately in Morgan Stanley on the news out of Europe. September 29 will be a big day. Link to comment Share on other sites More sharing options...
Junto Posted October 19, 2011 Author Share Posted October 19, 2011 MS Earnings out today. Short comment: earnings look decent given market events net of DVA. Global Wealth Management results are encouraging. Company Q3 Results link: http://bit.ly/qiFqwA Tangible Book Value: $27.79 Supplement Q3 Info: http://bit.ly/pReI7M Link to comment Share on other sites More sharing options...
Junto Posted October 27, 2011 Author Share Posted October 27, 2011 Nice run up on Morgan Stanley this past week. Definitely like my thesis still since the reported results. Link to comment Share on other sites More sharing options...
cmattporter Posted October 27, 2011 Share Posted October 27, 2011 Their equity isn't 59B. Goodwill is alone 7B and one will find outstanding options and preferred. Link to comment Share on other sites More sharing options...
Junto Posted October 28, 2011 Author Share Posted October 28, 2011 Nice run up on Morgan Stanley this past week. Definitely like my thesis still since the reported results. this sir was a "no brainer". no offense intended. it is not easy to find and invest in no brainers. I would clearly agree as I made it my second largest position over the past two months. Just surprised at the apprehension on this board to invest in anything financial related. Not that I don't know why they are concerned, just surprised. It is my opinion that this is nearing the right time to be cycling into financials. Their equity isn't 59B. Goodwill is alone 7B and one will find outstanding options and preferred. cmattporter? I think you are referring to tangible equity.The tangible equity was $27.79/share or $53.56 billion as of 9/30. The original post was written prior to 9/30 numbers. Link to comment Share on other sites More sharing options...
DCG Posted October 28, 2011 Share Posted October 28, 2011 Nice run up on Morgan Stanley this past week. Definitely like my thesis still since the reported results. this sir was a "no brainer". no offense intended. it is not easy to find and invest in no brainers. I would clearly agree as I made it my second largest position over the past two months. Just surprised at the apprehension on this board to invest in anything financial related. Not that I don't know why they are concerned, just surprised. I own WFC, USB and BAC. Have been looking at JPM, GS and MS bu haven pulled the trigger on any of them yet. Link to comment Share on other sites More sharing options...
prunes Posted October 31, 2011 Share Posted October 31, 2011 Good article pertinent to the broader investment banking industry http://epicureandealmaker.blogspot.com/2011/09/hard-rain-gonna-fall.html Link to comment Share on other sites More sharing options...
PlanMaestro Posted May 8, 2012 Share Posted May 8, 2012 M Stanley reassesses downgrade impact http://www.ft.com/cms/s/0/b5abae50-988d-11e1-ad3e-00144feabdc0.html#ixzz1uIfFjyEs Morgan Stanley dramatically increased its estimate of the amount of additional collateral it would have to post to its derivatives trading partners if rating agencies lower its credit ratings. The bank on Monday estimated it would have to cough up an extra $7.2bn of securities and other collateral in the event its ratings were changed by Standard & Poor’s and Moody’s to triple B and Baa2 respectively, two notches above junk status. That is a more than 50 per cent increase from the bank’s last estimate of $4.7bn. Moody’s put Morgan Stanley and several other banks on review for a downgrade in February, citing “vulnerabilities” in the companies’ capital markets businesses. Morgan Stanley could be the most affected by a downgrade since it is facing as much as a three-notch fall while the other banks are facing just a potential two-notch slide. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 13, 2012 Share Posted June 13, 2012 Very good presentation today by Gorman. Heavy emphasis on risk management procedures and their huge Wealth Management business after Smith Barney. No nonsense guy. http://cc.talkpoint.com/morg007/061212a_mc/ Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 13, 2012 Share Posted June 13, 2012 Summary presentation: http://www.bloomberg.com/news/2012-06-12/gorman-says-three-level-downgrade-would-be-somewhat-stunning-.html Link to comment Share on other sites More sharing options...
PlanMaestro Posted January 9, 2013 Share Posted January 9, 2013 Reading Loeb's letter to understand his view on Herbalife but the Morgan Stanley part was far more interesting. Another cancer surgery investment and Gorman is doing a good job. It's a pity MS doesn't have cheap warrants. During the Fourth Quarter, we initiated a position in Morgan Stanley (MS), which we believe is in the early innings of a turnaround. The bank’s investment banking advisory and equity sales and trading businesses – which we know well from our perspectives as both investors and long-time satisfied clients – have consistently won top three market shares and are impressively positioned. Although MS has historically failed to capitalize on its strengths, its leadership currently is focused on growing its good businesses while consolidating and successfully fixing its previously troubled Wealth Management business. In 2013, we expect Morgan Stanley to tackle its other weak business, Fixed Income, Currency, and Commodities (FICC) sales and trading. Morgan Stanley’s stock currently trades at a 20% discount to tangible book (down from a 35% discount when we acquired our stake at an average cost of $16.77 per share), and we view MS at these prices as a chance to buy a free call option on a promising restructuring. In Wealth Management, Morgan Stanley has approached the turnaround with focus and results have been encouraging. The underlying earnings power of the combined Morgan Stanley Smith Barney business can be seen in the pre-tax margin line: pre-tax margins in Wealth Management have risen from 6% in 2009 to 13% in Q3 2012, and look on track to meet or exceed management’s mid-teens target for 2013. Morgan Stanley has a tougher road ahead in dealing with its FICC businesses, which are limping along with a still-bloated cost structure and anemic returns due to regulatory changes stemming from the Global Financial Crisis. Nearly two thirds of the company’s Risk Weighted Assets on a fully loaded Basel III basis support the FICC businesses, which combined to generate roughly 25% of revenues1 in 2012. In Q4 2012, two of Morgan Stanley’s peers, UBS and Citi, took decisive action to restructure businesses irreparably harmed by regulatory changes. While we appreciate that Morgan Stanley finds itself in somewhat different circumstances, we still expect it to follow its peers’ lead and come up with a bold fix for the struggling FICC businesses early in 2013. If we did not believe Morgan Stanley’s management was up to these important tasks, we would not own such a significant position. As they look to cut costs, we believe it is critical to set the right tone at the Board level. We were surprised to learn that in 2011, Morgan Stanley paid its average Director $357k, or 26% more than Citigroup’s average Director ($283k) and 42% more than JPMorgan’s average Director ($251k), although Morgan Stanley is a substantially smaller and simpler bank. One of MS’s directors is familiar to us from previous corporate governance battles we have fought against moribund Boards not up to the job of turning around great institutions. We hope Morgan Stanley will show that its reinvention begins at the top, and set an example for the company by quickly revising its board practices and considering an upgrade of the composition of its board of directors to reflect best principles of corporate governance. Finally, our enthusiasm about MS’s turnaround benefits from our generally constructive macro views. We expect CEO confidence to rise and global corporate activity levels to increase markedly in 2013. Morgan Stanley, with its sterling reputation, talent pool, and record in execution in investment banking advisory and capital markets, is uniquely positioned to benefit from this improvement. Assuming Wealth Management pre-tax margins improve to 20% by 2014, Morgan Stanley’s earnings profile will shift toward a 50/50 split between cyclical, capital intensive capital markets businesses and a stable, capital-light Wealth Management business. This should lead to multiple expansion towards 12-13x P/E on projected earnings of approximately $3 per share driven by the Wealth Management margin improvement, FICC restructuring initiatives, and a stronger corporate activity environment. The combination of these factors suggests Morgan Stanley shares should nearly double from the recent $20 level. Link to comment Share on other sites More sharing options...
PlanMaestro Posted January 9, 2013 Share Posted January 9, 2013 Morgan Stanley to axe 1,600 jobs http://www.ft.com/cms/s/0/ff3b3b7e-5a6d-11e2-a02e-00144feab49a.html#ixzz2HWFA5mn1 Morgan Stanley is to cut 1,600 jobs in one of its most prominent businesses in the latest example of a Wall Street investment bank axing staff to reduce expenses. The job cuts amount to about 6 per cent of the total headcount in the bank’s institutional securities group, which helps companies raise money and complete big mergers and acquisitions. About half the 1,600 job cuts will be made in the US, the bank said. James Gorman, Morgan Stanley chief executive, told the Financial Times in October that there was “way too much capacity and compensation is way too high” in the banking industry. The FT reported then that the investment bank was preparing more pay and job cuts in early 2013 in its effort to reduce costs. The cull announced on Wednesday comes on top of the 4,000 jobs Morgan Stanley jettisoned last year and is the latest in a series of job cuts made by Wall Street banks. […] Until recently Morgan Stanley’s institutional securities business was run by two co-heads; Colm Kelleher in London and Paul Taubman in New York. Mr Taubman resigned at the end of last year after a fraught two-year partnership. Mr Kelleher had been in charge of the bank’s trading operations while Mr Taubman focused on more traditional investment banking, such as M&A. In his October interview, Mr Gorman suggested that job losses would play a part in cost-cutting at Morgan Stanley. Pay and bonuses for bankers “come down because the amount of people in the business comes down”, he said. Even with the additional cost-cutting, Morgan Stanley is targeting a much more modest return on equity than the pre-crisis levels of as much as 23 per cent. Return on equity is a key measure of a bank’s ability to make money for its shareholders. “We’re generating 5 per cent, can we get back to 10 per cent? That’s much more interesting to me than can we get back to 15 per cent or will we ever get back to the glory days – those are completely flawed anyway,” said Mr Gorman. Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 8, 2020 Share Posted October 8, 2020 Etrade and now Eaton Vance Morgan Stanley to Acquire Eaton Vance https://www.morganstanley.com/press-releases/morgan-stanley-to-acquire-eaton-vance Link to comment Share on other sites More sharing options...
Broeb22 Posted October 8, 2020 Share Posted October 8, 2020 Etrade and now Eaton Vance Morgan Stanley to Acquire Eaton Vance https://www.morganstanley.com/press-releases/morgan-stanley-to-acquire-eaton-vance And start the race for a SPAC-backed EV company to file to use the EV ticker. Link to comment Share on other sites More sharing options...
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