Some Bank of America investors, frustrated by years of low returns, had reached out to activist investors, ValueAct included, to gauge their interest in getting into BofA, according to people familiar with the matter…. In case of Morgan Stanley (NYSE:MS), the aggregated change in its shares held by investors in the recent 13F filings was positive 46.44 million, according to the data by Bloomberg. Those changes came shortly after BlackRock CEO Laurence Fink – whose company is one of Bank of America’s biggest shareholders – urged US companies to not make themselves targets for ” short-termism” – an allusion to activists – and to instead to provide shareholders with more information about their long-term strategy and the involvement of board members.
Advertisement
Banks have recently become the center of attraction for activist investors.
“We. don’t see too much of what an activist can do given the dependence on the markets and control the regulators have over things like capital return”, Evercore ISI analyst Glenn Schorr said on Tuesday.
However, it will be hard for activists to accumulate enough stake to influence any strategies given the bank’s size.
Morgan Stanley has been performing well since the start of the year, so it is safe to assume there is more potential for it to grow in future. The ratio improved, as 87 funds sold all Morgan Stanley shares owned while 244 reduced positions.
A look at performance overview of Morgan Stanley depicts that Performance (Week) is 3.1 percent while Performance Month is 7.97%.
Jeff Ubben, head of activist hedge fund ValueAct, told CNBC that his firm is “very supportive” of Morgan Stanley CEO James Gorman. He did not provide a timeframe or price target for the investment. Although the firm isn’t necessarily angling for major changes at the investment bank, Mayo said that could change. Shareholder profits take a back seat to the safety and soundness of the banking system. 67 funds bought stakes while 297 increased positions. ValueAct purchased Morgan Stanley shares at 0.7 times book value, which it described as an “extraordinary discount”.
“They’re safer and have more capital but they’re priced like they’re going to collapse”.
At bigger Wall Street firms, activists may call for cost cuts and streamlining troubled businesses. ValueAct has a reputation for targeting senior management of the companies it invests in.
Advertisement
Mitsubishi Ufj Financial Group Inc holds 100% of its portfolio in Morgan Stanley for 432.02 million shares. He expects the market to eventually realize the value hidden behind distractions like the bank’s small but troubled bond trading business and the Fed’s heavy oversight. “It feels like missing the forest for the trees”.
