Is Morgan Stanley (MS) a smart long-term choice?


Madison Funds, managed by Madison Asset Management, LLC, has released its third quarter 2022 “Madison Investors Fund” letter to investors – a copy of which can be downloaded here. For the third quarter, the Madison Dividend Income Fund (Class Y) fell -7.8%, relative to the S&P 500 Index, Russell 1000 Value Index and Lipper Equity Income peer group, declines in -4.9%, -5.6%, -5.8%, respectively. Year-to-date, the Fund is down -16.9%, which outperformed the S&P 500 Index and Russell 1000 Value Index returns of -23.9% and -17, 8%, respectively, versus the Lipper Equity Income peer group return of -16.0%. Try taking the time to check out the fund’s top 5 holdings to get an idea of ​​their top stock picks in 2022.

In its letter to investors for the third quarter of 2022, Madison Dividend Income Fund mentioned Morgan Stanley (NYSE:MRS) and explained his ideas for the company. Founded in 1935, Morgan Stanley (NYSE:MS) is a multinational investment management and financial services company based in New York, New York, with a market capitalization of $136.3 billion. Morgan Stanley Inc (NYSE:MS) has returned -17.98% year-to-date, while its 12-month returns are down -22.19%. The stock closed at $80.51 per share on October 25, 2022.

Here’s what Madison Dividend Income Fund has to say about Morgan Stanley (NYSE:MS) in its Q3 2022 Letter to Investors:

“This quarter, we are emphasizing Morgan Stanley (MS) as an example of relative performance in the financial sector. MS is a leading investment bank and wealth management firm with approximately $5 trillion in client assets under management. He merged Citigroup’s Smith Barney business into his own wealth management business after the 2008 financial recession/crisis, resulting in a more stable business model. Recent acquisitions of asset manager Eaton Vance and E-Trade provide additional stability and higher capital returns. We believe MS has a sustainable competitive advantage due to its size and scale, global reach, strong reputation and financial distribution capabilities. Importantly for a financial institution, it is in good financial health, because the main leverage ratios, including the Common Equity Tier 1 ratio, the Common Equity Tier 1 ratio, the Tier 1 leverage ratio and the additional leverage ratio were all well above the required minimums at the end of 2021.1

Our thesis on MS is that its wealth management business will continue to become a more important part of the overall business, which will increase overall margins and return on equity (ROE). Wealth and asset management is less cyclical than investment banking, often generates higher margins and provides better stability of financial results. For example, the addition of Smith Barney added significant scale and increased wealth management operating margins from less than 10% to around 20% in recent years, while increasing returns on capital. clean. Going forward, we believe the company will benefit from rising asset prices and higher interest rates, if they occur over time…” (Click here to see the full text)


Our calculations show that Morgan Stanley (NYSE:MS) fell short and did not make it to our list of 30 most popular stocks among hedge funds. Morgan Stanley (NYSE:MS) was in 58 hedge fund portfolios at the end of the second quarter of 2022, compared to 61 funds in the previous quarter. Morgan Stanley (NYSE:MS) has returned -0.35% over the past 3 months.

In September 2022, we also shared another hedge fund’s perspective on Morgan Stanley (NYSE:MS) in another article. You can find other letters from hedge fund investors and leading investors on our letters to hedge fund investors 2022 Q3 page.

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Disclosure: None. This article originally appeared on Insider Monkey.


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