Is Morgan Stanley (NYSE:MS) a buy, sell, or hold? Prominent investors are taking an optimistic view. The number of bullish hedge fund bets inched up by 8 recently.
To most market participants, hedge funds are perceived as worthless, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, we choose to focus on the masters of this club, about 450 funds. Most estimates calculate that this group controls the lion’s share of all hedge funds’ total capital, and by monitoring their top equity investments, we have spotted a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as beneficial, optimistic insider trading sentiment is another way to break down the investments you’re interested in. Obviously, there are lots of incentives for a bullish insider to drop shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this tactic if piggybackers know where to look (learn more here).
With these “truths” under our belt, we’re going to take a glance at the latest action surrounding Morgan Stanley (NYSE:MS).
What have hedge funds been doing with Morgan Stanley (NYSE:MS)?
At Q1’s end, a total of 61 of the hedge funds we track were long in this stock, a change of 15% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, Boykin Curry’s Eagle Capital Management had the biggest position in Morgan Stanley (NYSE:MS), worth close to $631.8 million, accounting for 3.8% of its total 13F portfolio. The second largest stake is held by Pzena Investment Management, managed by Richard S. Pzena, which held a $253.2 million position; 1.8% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Ken Heebner’s Capital Growth Management, Ken Griffin’s Citadel Investment Group and Ric Dillon’s Diamond Hill Capital.
As one would reasonably expect, some big names have jumped into Morgan Stanley (NYSE:MS) headfirst. Moore Global Investments, managed by Louis Bacon, assembled the biggest position in Morgan Stanley (NYSE:MS). Moore Global Investments had 98.6 million invested in the company at the end of the quarter. Curtis Macnguyen’s Ivory Capital (Investment Mgmt) also made a $71.7 million investment in the stock during the quarter. The other funds with brand new MS positions are Tony Chedraoui’s Tyrus Capital, Paul Ruddock and Steve Heinz’s Lansdowne Partners, and Philippe Jabre’s Jabre Capital Partners.
Insider trading activity in Morgan Stanley (NYSE:MS)
Bullish insider trading is best served when the primary stock in question has experienced transactions within the past six months. Over the last half-year time frame, Morgan Stanley (NYSE:MS) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Morgan Stanley (NYSE:MS). These stocks are LPL Financial Holdings Inc (NASDAQ:LPLA), TD Ameritrade Holding Corp. (NYSE:AMTD), CME Group Inc (NASDAQ:CME), Charles Schwab Corp (NYSE:SCHW), and Nomura Holdings, Inc. (ADR) (NYSE:NMR). This group of stocks are in the investment brokerage – national industry and their market caps are similar to MS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| LPL Financial Holdings Inc (NASDAQ:LPLA) | 14 | 0 | 5 |
| TD Ameritrade Holding Corp. (NYSE:AMTD) | 18 | 2 | 7 |
| CME Group Inc (NASDAQ:CME) | 30 | 0 | 10 |
| Charles Schwab Corp (NYSE:SCHW) | 32 | 0 | 9 |
| Nomura Holdings, Inc. (ADR) (NYSE:NMR) | 8 | 0 | 0 |
With the results exhibited by the aforementioned time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Morgan Stanley (NYSE:MS) shareholders fit into this picture quite nicely.
