This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Morgan Stanley's $4B Week: Street Whispers

Stocks in this article: MS C

NEW YORK ( TheStreet) -- Morgan Stanley (MS) sure made the most of the four day week last week, adding 14%, or more than $1 billion per day to its market cap.  

Upgrades from CLSA analyst Mike Mayo and JPMorgan's Kian Abouhossein were clearly big factors, as is the expected resolution of a dispute with Citigroup (C) over the value of the Smith Barney wealth management joint venture. Keefe, Bruyette & Woods analyst David Konrad argues the disagreement is likely to be won by Morgan Stanley.

Assuming he's right, Morgan Stanley shares could see an additional pop. Still, its hard to envision Morgan Stanley outperforming other big banks for an extended period. Abouhossein argues the bank is pursuing "the right strategy" in shrinking its fixed income unit, while Mayo contends investors want a "more aggressive restructuring" of the business. Abouhossein writes that the bank's capital position is stronger by certain metrics, while Mayo offers a complex formula looking at credit default swaps spreads over three different periods to arrive at a price to tangible book value that exceeds Morgan Stanley's current one by a healthy margin.

Still, none of this analysis presents a compelling case that Morgan Stanley is moving in a radical new direction. Mayo might agree. He contends in his report that shareholders will push for radical changes soon if the company doesn't start to deliver better results.

But what kind of radical changes might we be talking about? Morgan Stanley has revamped its fixed income business so many times in the past few years even its own traders must have lost count. A fresh analysis of capital levels or historical swap spreads can only take the stock so far. The dispute with Citigroup over Smith Barney--the companies are $4 billion apart in assessing the value of the business--mostly serves to highlight the fact that Wall Street still lives in a fantasy world of accounting maneuvers. Morgan Stanley may win this round with Citigroup, but it will lose the next one, or the next. With suspicion of the securities business at an all-time high, nothing short of sustained, real earnings over a few quarters will satisfy investors that Morgan Stanley has turned the corner.

-- Written by Dan Freed in New York.

Follow this writer on Twitter.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs