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Hedge Funds Lost a Bundle on Morgan Stanley $MS Bets

Morgan Stanley (MS) declined 4% on Tuesday, October 4, 2011, before the opening bell after it received a downgrade from Egan-Jones. The downgrade brought Morgan Stanley from an A+ to an A rating, with a negative outlook, reported Yahoo! Finance. The decrease caused Morgan Stanley to reach a 52-week low of $11.58 a share. Morgan Stanley was trading at $31.04 in March 2011.


In spite of making strong changes in its capital, funding and liquidity management over the last 3 years, Morgan Stanley is currently battling rumors that it is overexposed to struggling European banks and concerns over its credit and derivatives exposures. Currently the stock is up less than 1%, reversing its earlier losses. However it still lost $2.30 since September 27th. Here are the hedge funds that lost a bundle on Morgan Stanley:

  1. Eric Mindich – Eton Park Capital: Lost $34.5 million
  2. Jonathon Jacobson – Highfields Capital Management: Lost $30 million
  3. Bruce Berkowitz – Fairholme (Fairx): Lost $27.5 million
  4. Andreas Halvorsen – Viking Global: Lost $14 million
  5. Paul Ruddock and Steve Heinz – Lansdowne Partners: Lost $10.2 million
  6. David Gallo – Valinor Management Llc: Lost $10 million

These calculations assumed that these hedge funds did not increase or reduce their stock positions in Morgan Stanley since the end of June. We did not take into account their option positions.