4. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 58
Dividend Yield as of November 4: 3.64%
Morgan Stanley (NYSE:MS) is an American multinational financial holding company that operates through Institutional Securities, Wealth Management, and Investment Management segments. On October 27, Morgan Stanley (NYSE:MS) declared a $0.775 per share quarterly dividend, in line with previous. The dividend is payable on November 15, to shareholders of record on October 31.
On October 17, Oppenheimer analyst Chris Kotowski reiterated an Outperform rating on Morgan Stanley (NYSE:MS) but lowered the price target on the shares to $88 from $93. The analyst noted that Morgan Stanley (NYSE:MS) was down 5.1% on earnings day, with results largely in line with his estimates, which were also close to market consensus.
According to Insider Monkey’s data, 58 hedge funds were bullish on Morgan Stanley (NYSE:MS) at the end of June 2022, compared to 61 funds in the last quarter. Boykin Curry’s Eagle Capital Management is the largest stakeholder of the company, with approximately 14 million shares worth over $1 billion.
Here is what Madison Dividend Income Fund has to say about Morgan Stanley (NYSE:MS) in its Q3 2022 investor letter:
“This quarter we are highlighting Morgan Stanley (MS) as a relative yield example in the Financial sector. MS is a leading investment bank and wealth management firm with approximately $5 trillion of client assets under management. It merged Citigroup’s Smith Barney business into its own wealth management business after the 2008 recession/financial crisis, which resulted in a more stable business model. Recent acquisitions of asset manager Eaton Vance and E-Trade provide additional stability and higher returns on capital. 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 as key leverage ratios including common equity Tier 1 ratio, Tier 1 capital ratio, Tier 1 leverage ratio, and supplementary leverage ratio were all well above required minimums at the end of 2021.1
Our thesis on MS is that its wealth management business will continue to become a larger part of the overall company, which will increase overall margins and return on equity (ROE). Wealth management and asset management are less cyclical than investment banking, and often generate higher margins and provide better stability of financial results. For example, the addition of Smith Barney added significant scale and boosted wealth management operating margins from below 10% into the mid-20%s over the past several years while also increasing returns on equity. Looking ahead, we believe the company will benefit from rising asset prices and higher interest rates, should they happen over time…” (Click here to see the full text)
