Morgan Stanley's Strong Results

Morgan Stanley's Strong Results

over 3 years ago2 mins

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Investment bank Morgan Stanley reported better third-quarter results than expected on Thursday – but its own investors played it cool ❄️

What does this mean?

Morgan Stanley’s revenue and profit both beat analysts’ overall forecasts. Its trading operation – helping clients chop and change their portfolios – was responsible for the lion’s share of the outperformance, bringing in almost half a billion dollars more than expected 💰 Investment and “wealth” management – the latter looking after the uber-rich’s riches – generated more revenue than expected too, but wealth fell short in terms of its profit margin. Given that this business line contributes over half “Margin” Stanley’s total profit, that might’ve given otherwise excited investors a reason to act relatively unimpressed: the bank’s share price only ticked up 2%…

Source: The Wall Street Journal
Source: The Wall Street Journal

Why should I care?

Morgan Stanley’s CEO is known to be a dealmaker, and he’s accordingly expanded its investment management operations – first by purchasing Smith Barney in the wake of the financial crisis over a decade ago, and more recently by buying Canadian fintech Solium Capital and online brokerage E-Trade 🤝 Between Solium’s management of employee stock plans and E-Trade’s catering to a new wave of amateur capitalists, Morgan Stanley’s building an increasingly rare beast these days: a full-service investment management platform customers appear happy to pay for. Last week’s announcement that it’s adding rival Eaton Vance to the mix should strengthen things further.

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Morgan Stanley reported that the amount its investment management divisions, er, manage rose last quarter – but it’s still got nothing on the world’s biggest such player, BlackRock 🌎 The firm now has almost $8 trillion under management – and it revealed earlier this week that investors were pouring cash into long-term strategies last quarter, particularly “fixed income” funds (i.e. bonds), while yanking cash from passive funds tracking stock indexes.

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