Third Point LLC, the hedge-fund firm led by Daniel Loeb, exited its position in Morgan Stanley in the first quarter after the shares rallied.
Third Point, which owned owned 7.75 million shares valued at $148.2 million at the end of 2012, didn’t list the New York-based firm among its holdings yesterday in a quarterly filing. Third Point said it bought shares at an average cost of $16.77 when it announced the purchase in January.
Loeb’s firm said in a January letter that shares of Morgan Stanley may rise to almost $40 as the investment bank improves brokerage margins and management devises a “bold fix” for the fixed-income business. The bank said a week later that pretax margin in the wealth-management division rose to 17 percent in the fourth quarter, the highest since creating a brokerage joint venture with Citigroup Inc. in 2009, and laid out plans to further shrink the fixed-income unit.
Morgan Stanley gained 15 percent in the first quarter to $21.98. It peaked at $24.47 in the period, 46 percent above Third Point’s stated purchase price. The shares rose 2.4 percent yesterday in New York to $24.86, the highest in more than two years.
Elissa Doyle, a spokeswoman for New York-based Third Point, declined to comment, as did Morgan Stanley’s Wesley McDade.
Moore Capital Management LP, the hedge-fund firm run by Louis Moore Bacon, bought 4.49 million shares in the first quarter, which had a value of $98.6 million at March 31. Lansdowne Partners Ltd., the biggest European hedge-fund firm focused on stock-picking, bought 1.92 million shares valued at $42.2 million in the quarter. Morgan Stanley owns a minority stake in Lansdowne.
George Soros’s Soros Fund Management LLC exited its stake of 4.14 million shares of Morgan Stanley, which had all been acquired in the fourth quarter, according to a filing.
Morgan Stanley is up 30 percent this year as Chief Executive Officer James Gorman has laid out plans to double the firm’s return on equity from 5 percent in 2012. Gorman said this week at an annual shareholder meeting that the bank can reach his goal by next year if regulators allow it to return “reasonable” amounts of capital to shareholders through buybacks and dividends.
That forecast prompted Michael Mayo, an analyst at CLSA Ltd., to raise his share-price estimate on Morgan Stanley to $36 from $30.