Fri, Jul. 31, 7:52 AM
- According to Reuters, the value of merger and acquisition deals through July 30 was $436.4B, including 14 deals worth over $5B apiece. Although down from June's torrid pace of $546.8B, it still ranks as the seventh busiest month on record. Leading the pack was Teva's $40.5B purchase of Allergan's generic drugs business.
- The top investment bank in terms of the total value of transactions was Goldman Sachs (NYSE:GS), involved in 35 deals worth $148.8B, including half of the top ten. JP Morgan (NYSE:JPM) was second with 30 deals worth $116.1B while Morgan Stanley (NYSE:MS) was third with 33 deals valued at $95.9B.
- Global M&A so far this year is $2.64T, up 41% from last year. The action in the U.S. is up 66%.
- Energy and healthcare are the leading sectors. There have been 1,557 deals in energy worth $407B. Healthcare is close behind with 1,577 deals worth $395B.
- ETFs: UNG, USO, OIL, UGAZ, UCO, DGAZ, UWTI, BIB, SCO, BNO, BOIL, GAZ, DBO, DWTI, DTO, UGA, KOLD, USL, GRX, UNL, IRY, BIS, IXJ, DNO, BME, UHN, DBE, OLO, SZO, DCNG, GRN, RJN, FUE, OLEM, JJE, ONG, UBN
Mon, Jul. 27, 8:13 AM
- Investa Property Group is Australia's 3rd-largest owner of downtown office buildings with about a A$9B portfolio, and Morgan Stanley (NYSE:MS) put the operation up for sale earlier this year.
- Among the more than 20 bidders for Investa were Blackstone and Brookfield Asset Management, but the winner is China Investment Corporation. No price was disclosed, but Reuters reports Investa fetched more than A$3B.
- Previously: Blackstone, Brookfield reportedly among bidders for billions in Aussie real estate (April 21)
Fri, Jul. 24, 3:31 PM
- Goldman's (GS -1.8%) Q2 results confirmed the team's expectation of positive revisions to 2016 consensus EPS. Zions (ZION -0.7%) has "multiple catalysts" to reach improve profitability goals and EPS growth over the next three years.
- Guggenheim's four key investment themes: 1) Names levered to improving M&A, with Goldman being the best idea, followed by Morgan Stanley (MS -1.3%); 2) Restructuring stories, with Zions the best idea, but First Horizon (FHN -1%), Ally Financial (ALLY -1.8%), and BofA (BAC -1.6%) also worth looking at; 3) Idiosyncratic growth stories like MasterCard (MA +0.7%), Visa (V +4.5%), Synchrony Financial (SYF -2.4%), and Signature Bank (SBNY -0.8%); 4) Names with a distinct M&A catalyst in the regionals group like BB&T (BBT -1.5%), CIT Group (CIT -1.6%), and Springleaf (LEAF -1.4%).
- Mixed results from credit card companies affirm the team's preference for SYF, but the risk/reward at AmEx (AXP -1.4%) is improving. AmEx, CapOne (COF -13%), and Discover (DFS -2.7%) results show the boosted competition they face form the banks, which is slowing growth, and lifting marketing and rewards costs.
- Source: Barron's
- Previously: Capital One tumbles after earnings miss and trio of downgrades (July 24)
Mon, Jul. 20, 3:58 PM
- "We're very comfortable with the business [we've] got and the size of the business,” says Morgan Stanley (MS -0.4%) CEO James Gorman, speaking on the Q2 earnings call. "We had a desire to get to scale, and we are well and truly at scale.”
- Wealth Management pre-tax income of $885M in Q2 was up 13.8% Y/Y, with revenue of $3.875B up 4.5%. Compensation expense stayed flat Y/Y, while non-comp expense rose 5%, allowing a profit margin inside the bank's 22-25% targeted range.
- Like many others in the industry, Morgan is focused on growing fee-based accounts and loans, as opposed to traditional commission business. Unlike, for instance, Merrill Lynch, Morgan isn't trying to do so by boosting its adviser head count. As of the end of Q2, Morgan had 15,771 advisers, off 3% Y/Y.
- Previously: Morgan Stanley up 3.8% after earnings beat (July 20)
- Previously: Morgan Stanley beats by $0.05, beats on revenue (July 20)
Mon, Jul. 20, 2:55 PM
- JPMorgan (JPM +0.4%) faces the largest capital "surcharge" or 4.5% of its risk-weighted assets, with the other seven lenders falling in the 1-3.5% range.
- Citigroup's (NYSE:C) surcharge is 3.5%, BofA (NYSE:BAC), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) 3%, Wells Fargo (NYSE:WFC) 2%, State Street (NYSE:STT) 1.5%, and Bank of New York Mellon (NYSE:BK) 1%. Taken together, the group's capital cushion will more than $200B larger than if the surcharge was not implemented.
- The surcharges will begin to be implemented on January 1, and fully phased in by January 2019. JPMorgan has taken steps to boost its capital levels, and Fed officials indicate the bank is about $12.5B shy of the full surcharge, reports the WSJ.
- The other lenders currently have the necessary capital.
- This new requirement comes on top of the existing base 7% common-equity capital standard necessary for most banks.
- Federal Reserve press release
Mon, Jul. 20, 7:16 AM
- Q2 net income (excl. DVA) of $1.7B or $0.79 per share vs. $1.2B and $0.58 one year ago. ROE (excl. DVA) of 9.1%.
- Institutional Securities pre-tax income of $1.44B on revenue of $4.99B vs. $873M and $4.161B a year ago. Advisory revenue of $423M, equity underwriting revenue of $489M and fixed income underwriting revenue of $528M all roughly flat Y/Y. Equity sales and trading revenue of $2.3B vs. $1.8B a year ago. FICC revenue of $1.3B up from $1B - this as most other banks saw Y/Y decline.
- Wealth Management pre-tax income of $885M on revenue of $3.875B vs. $763M and $3.702B a year ago. Asset management fee revenue of $2.2B vs. $2.1B. Transactional revenue of $8872M vs. $991M. Net interest income of $737M vs. $577M. Total client assets of $2T. Client assets in fee-based accounts of $813B up 7% Y/Y. Average annualized revenue per representative of $978K up 8% Y/Y.
- Investment Management pre-tax income of $220M on revenue of $751M vs. $209M and $705M a year ago.
- CET 1 ratio of 12.5%. Tangible book value per share of $29.54.
- Conference call at 8:30 ET
- Previously: Morgan Stanley beats by $0.05, beats on revenue (July 20)
- MS +3.8% premarket
Mon, Jul. 20, 7:02 AM
Sun, Jul. 19, 5:30 PM
Fri, Jul. 10, 7:54 AM
- Royal Dutch Shell (RDS.A, RDS.B) agrees to buy Morgan Stanley's (NYSE:MS) European gas and power trading portfolio for an undisclosed sum.
- "Comprising predominantly physical and financial gas and power trades, the deal further expands Shell's activities in core energy markets across Europe," the company says.
- Morgan Stanley’s exit from trading power and gas in Europe follows similar moves by Deutsche Bank, Bank of America and Barclays in the past two years.
Mon, Jul. 6, 4:41 PM
- Last year, the Fed and FDIC found most of wind-down plans submitted by twelve of the largest U.S. banks (or U.S. units of overseas banks) had numerous deficiencies, and sent the lenders back to the drawing board.
- The two government agencies today posted public sections of the latest versions of the living wills, and said they will begin reviewing. Feedback is expected before year-end.
- The lucky 12: BAC, BK, C, GS, JPM, MS, STT, UBS, WFC, BCS, CS, DB.
Mon, Jun. 29, 8:53 AM
- Since the financial crisis, Morgan Stanley's (NYSE:MS) plan has been to de-emphasize its trading operations in favor of more stable, less risky businesses like wealth management. It's a move which has won the applause of investors and analysts, and Morgan is up 62% over the past two years vs. Goldman Sachs' - still a believer in fixed-income - 41% advance.
- However, with profitability targets still to be hit, U.S. rates on the rise, and a recent credit-rating boost from Moody's, Morgan CEO James Gorman and team see an opportunity for the bank to take a larger slice of Wall Street's roughly $100B in annual fixed-income trading revenue.
- In recent weeks Morgan has reportedly been soliciting more fixed-income business and pitching more trading ideas to its clients. Of import for those worried about risk: Management believes it can gain more business - perhaps several billion above the $3.8B in revenue in 2014 - without enlarging the balance sheet. By focusing on large money managers, Morgan hopes for a speedy pace of paper coming and going from the bank, thus keeping inventories trimmed.
- Source: WSJ
Wed, Jun. 10, 10:01 AM
- More than six years after the bottom, only four of the globe's biggest banks sport stock prices trading at a premium to book value. Leading the way is UBS at about 1.4x book. Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), and Morgan Stanley (NYSE:MS) also trade for north of book.
- Deutsche Bank (NYSE:DB) - whose ROE of 2% is about one-tenth of what it was pre-crisis - brings up the rear at just about 0.5% of book. Barclays (NYSE:BCS) sells for roughly 0.7x book, and Bank of America (NYSE:BAC) only slightly more than that.
- Checking further on ROE, Goldman leads the way at about 12%. Citigroup (NYSE:C) is less than 5%, but stands out as being the only bank with a higher ROE today than before the crisis.
- Looking at total return since the crisis, Goldman again leads the way at about 170%, with Morgan Stanley and JPMorgan a close second/third. Citigroup is the only major bank with a negative total return over that time frame.
- Source: Bloomberg
Wed, Jun. 3, 12:36 PM
- “A clear separation has emerged between the biggest brokers and the rest of the market,” says Jay Bennett of Greenwich Associates. A survey by his firm finds the top four U.S. equity brokers - Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), and Morgan Stanley (NYSE:MS) - are widening their market share lead over the rest of the industry.
- According to Greenwich, all had more than an 8% share of trading, with number five Credit Suisse (NYSE:CS) at 6.9%.
- Bennett calls it a segmented market composed of the big four, the rest of the bulge bracket, and a long tail of competitors with relatively smaller shares.
- ETFs: IAI, KCE, KBWC
Wed, Jun. 3, 11:01 AM
- For regulatory reasons (pressure to counter money laundering), Morgan Stanley (MS +1.6%) recently shifted coverage of Caribbean and Latin American clients out of wealth management and into its institutional business, according to the company.
- As a result, Morgan's The Americas Group, led by Don d'Adesky, moved its practice and $2.4B in client assets to Raymond James (RJF +2%). While brokerages typically go to the mattresses to retain such business, a Morgan spokeswoman simply said the bank was no longer able to accommodate the team's business model.
- Raymond James pronounces itself "very comfortable with the team's business model."
- Source: WSJ
Mon, Jun. 1, 3:42 PM
- Morgan Stanley's (MS +1%) brokerage has about 4M clients and $2.05T in assets, with private wealth management dealing with those customers with a net worth of $20M or more.
- Eric Benedict is leaving after 19 years with the firm, and he's being replaced by Vince Lumia, currently head of capital markets for the brokerage division. Investment banker Elizabeth Dennis will succeed Lumia.
- The reshuffle continues an effort by CEO James Gorman to build a deeper bench of top management and create stronger ties between the bank's two largest divisions.
- Source: WSJ
Thu, May 28, 2:43 AM
- Morgan Stanley (NYSE:MS) CEO James Gorman defended the 25% pay hike to $22.M he was awarded last year - reportedly the highest among Wall Street CEOs - saying it was justified by the bank's performance.
- "We had three years where the stock went up...so the board, representing shareholders, thought that justified very strong performance," Gorman declared. "In previous years, when we underperformed, we were payed down and that's the way it should be."
- Shares of the bank have risen over the past three years, up 19% in 2012, 60% in 2013 and 23% in 2014.
- Previously: Morgan Stanley's Gorman gets 25% pay raise in 2014 (Apr. 01 2015)
MS vs. ETF Alternatives
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