No sugarcoating it: Mayo likes Morgan Stanley

'Morgan Stanley, Morgan Stanley, and Morgan Stanley" are Mike Mayo's top 3 picks among the banks. MS is double over the last year and it's a double again over the next three, he says.

Of the dip in trading revenue report from Citi which hit the banks yesterday, Mayo says it's old news - fixed income trading has been going down for years and a continued fall is already in Mayo's models. Any revisions lower are little more than "noise," and will be a blip on the screen a few months from now. Morgan Stanley gets just 15% of revenue from fixed-income trading - sluggishness in this area is no excuse not to own the stock, says Mayo.

"Revenues stink in the banking industry," he allows, and that's why he likes Morgan Stanley (and Citigroup C as well) - "the restructuring story can cut through the revenue weakness."

What about Bank of America (BAC) which has moved nearly tick for tick with Morgan Stanley this year? Morgan has more levers, says Mayo, particularly in Wealth Management after its purchase of Smith Barney from Citigroup.

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Comments (4)
  • mphill47
    , contributor
    Comments (605) | Send Message
    Bove vs Mayo, let's see who is right. Mayo has 12$ tgt on BAC, Bove says 17$++. I won't sugar coat it, IMO Mayo is a worm.
    24 Sep 2013, 02:32 PM Reply Like
  • John/Jack
    , contributor
    Comments (163) | Send Message
    Mayo was, is, and will always BE wrong about BAC. He doesn't understand the business BAC is in.
    24 Sep 2013, 02:44 PM Reply Like
  • sidiji
    , contributor
    Comments (290) | Send Message
    Mayo has had a thing for BAC for a long time now. I remember last time I heard his name, he was publicly complaining BAC disconnected him from a conference call, when it turned out that he had called into the wrong number, lol. The guy is a joke.
    25 Sep 2013, 05:42 AM Reply Like
  • sidiji
    , contributor
    Comments (290) | Send Message
    FICC for $BAC was 12% of revenues as of last quarter, even lower than $MS 's Looks like $BAC luck out again in not being where the hit is, this is one reason $BAC so potentially more valuable than $C or $MS imo. It's just not as exotic.
    25 Sep 2013, 09:55 AM Reply Like
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