NEW YORK (

TheStreet

) --

Morgan Stanley

(MS) - Get Morgan Stanley (MS) Report

will look to regain credibility with investors and analysts when it reports its first-quarter results ahead of Thursday's opening bell.

"You definitely get the sense investors are frustrated with

Morgan Stanley

(MS) - Get Morgan Stanley (MS) Report

as a stock. It hasn't gone anywhere for 24 months," says Derek Pilecki, who runs Florida-based hedge fund Gator Capital Management.

Indeed, Morgan Stanley shares have lost 4% since the start of 2011, and more than 14% in the past year, although the stock's 52-week low of $22.40 does date back to July 1, 2010, so it has seen a bounce from there at current levels.

Still, Pilecki has recently been buying Morgan Stanley shares on the theory that investors are underestimating the company's earnings potential. He argues Morgan Stanley is inexpensive versus rival

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. (GS) Report

on the basis of price-to-tangible book value per share.

Morgan Stanley's price-to-tangible book value per share was 1.09 as of Tuesday's close, versus 1.28 for Goldman Sachs, according to

Bloomberg

data.

"That's too wide a spread," Pilecki says. He argues that Morgan Stanley Smith Barney, a retail brokerage joint venture with

Citigroup

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in which Morgan Stanley owns the majority stake, gives Morgan Stanley a broader business mix than Goldman.

And while Morgan Stanley will have to cough up additional capital to eventually take over full control of the venture, Pilecki believes the business will be an excellent contributor to earnings growth once it is fully integrated.

As far as the first quarter is concerned, the average estimate of analysts polled by

Thomson Reuters

is for a profit of 34 cents per share on revenues of $7.9 billion.

One factor that analysts expect to weigh on the bottom line is that the company could see some $300-400 million in losses tied to hedging bets gone awry on monocline bond insurer

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MBIA

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.

Morgan Stanley built up exposure to MBIA during the crisis, as the insurer underwrote protection on some Morgan Stanley structured bond deals. Once the crisis hit, the investment bank hedged that exposure by buying credit default swaps (CDS) that would pay off if MBIA were to default. However, MBIA's creditworthiness has been improving--an event that has caused Morgan Stanley's CDS hedges on the insurer to decline in value.

A joint venture with

Mitsubishi UFJ Financial Group

(MTU)

, the giant Japanese financial company that rescued Morgan Stanley during the market meltdown in 2008 by taking a $9 billion stake in the company, is also struggling, according to a story in

The New York Times

earlier this month that cited the

Nikkei

newspaper of Japan.

The report contends that Morgan Stanley appears stuck in the costly deal with Mitsubishi, which, similar to one involving Goldman and

Berkshire Hathaway

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, requires payment of a hefty dividend-- $850 million per year in this instance.

While Goldman recently repaid Buffett, Morgan Stanley cannot get out of its deal with Mitsubishi unless the stock trades above $37.875 for 20 days out of 30 consecutive trading days, according to the

Times

. The shares were at $26.10 mid-Wednesday.

Fixed income trading is another area of potential concern. While that business is an important part of any investment bank, Morgan Stanley has struggled in this area, turning over top management in the unit repeatedly since big losses in the fourth quarter of 2007 nearly cost then-CEO John Mack his job.

Mack has since cut back his duties, holding on to his Chairman title on the bank's board, while ceding the CEO post to James Gorman, an Australian veteran of Merrill Lynch and blue-chip consulting firm McKinsey & Co. with a background in wealth management.

Gorman took over the top job only at the start of last year, though he is already under pressure from shareholders frustrated at the stagnant stock price on the one hand, and employees unhappy over what they see as inadequate compensation, according to the

Times report

.

--

Written by Dan Freed in New York

.

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