Bookkeeping: Closing Morgan Stanley (MS)

Submitted By Trader Mark
Someone emailed me if I had a list of stocks in any sectors I would not buy due to their sector (i.e. ass="blsp-spelling-corrected" id="SPELLING_ERROR_0">cigarettes or defense stocks or other "sin" stocks) - the short answer is no. However, I am adding a list of stocks for individual reasons I won't buy as a small protest ... Chesapeake Energy (CHK) is a new one for the egregious handout they just gave their CEO - a new story yesterday in Wall Street Journal to add to what I've already put on the site... I'll post it later... Unfortunately, using egregious compensation as a limiting factor might cut down my options in the stock market by about 80%, but what CHK is doing now is beyond the pale. Government Sachs (GS) is the other. While the whole "if you are unhappy just sell your stock and management will get the message" logic is a complete joke in our current system, I still don't want to touch these things.

The reason I bring this up is I bought Morgan Stanley (MS) a few months ago instead of Goldman as a proxy for the financials... Goldman has outperformed (shocker) but when you have a direct line to the government, I suppose that helps positioning your trades. The fact they now are doing 20% of all trades in the market is beyond suspicious as well... this magical "underlying bid" is coming from somewhere, and I think it is pretty clear where. Hold on, I hear a black helicopter coming...

Anyhow, since I added Morgan (which at the time was the only financial I had), I've added other names in the sector. So I now have exposure to the space and don't necessarily need MS. I was quite underwhelmed by MS's quarter and while these two (GS and MS) have eliminated most of their competition this past 18 months - that's more of a long term theme. For now the stock action in Morgan Stanley is uninspiring. So I am going to sell my long position - I've had both a long and short on for a few months, trading from both sides.... instead now, I can play the sector through various other positions long, and still use Morgan as a short from time to time. No that you'd ever want to short anything in the paper printing prosperity era where all assets will be inflated over and above "natural prices".

I'm exiting this last 0.5% stake of Morgan Stanley around $22.20 - taking a 6% loss on this last batch but we've had quite a few good trades for profit since we started the position. There are too many stocks behaving well to have capital wasting away here.

EDIT 11:15 AM - just saw this:

Morgan Stanley has had “an exodus of some of our key people,” Chief Executive Officer John Mack said. Some of the employees left for non-U.S. companies, Mack said at the firm’s annual meeting today in Purchase, New York. Mack was responding to a question regarding the effect of compensation restrictions on the firm’s ability to retain workers.

And this backs up our whole thesis on the boutique firms [Apr 8: Bookkeeping: Starting Greenhill & Co]

Short Morgan Stanley in fund; no personal position

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