One of the true icons of finance, Goldman Sachs Group (GS), issued its Q4 report this morning. The stock has been weak off the numbers; at the time of this writing, shares were down well over 5%, and volume was very active. Looking through the press release, I didn't come away as bearish as the market. Then again, the session as a whole was rather choppy, so perhaps overall sentiment was exerting an influence. Still, a 5% sell-off is notable.

Let's look at some highlights. For the fourth quarter, Goldman, whose colleagues include JPMorgan Chase (JPM) and Morgan Stanley (MS), made $8.20 per share. Last year at this time, the company reported a loss of $4.97 per share. Besides improving year-over-year, per-share profit increased over 50% on a sequential basis as well. According to Earnings.com, $5.20 was the number to beat.

Continue reading Goldman Sachs Not In Demand After Q4 Report

Goldman Sachs Not In Demand After Q4 Report originally appeared on BloggingStocks on Thu, 21 Jan 2010 15:40:00 EST. Please see our terms for use of feeds.

Microsoft (NASDAQ: MSFT) has engaged investment bank Morgan Stanley (NYSE: MS) to help it unload digital agency Razorfish. Publicis (OTC: PGPEF) is looking for targets in the online ad space and could be a possible bidder.

Razorfish has been valued at $600 million to $700 million, based on a top line of approximately $400 million for its last fiscal year and peer margins of 12% to 13%. The company boasts 2,000 employees and clients that include Audi, Nike (NYSE: NKE) and Kraft (NYSE: KFT). Microsoft bought the company as part of a $6 billion deal to acquire aQuantive. At the time, Razorfish was known as Avenue A Razorfish, as the result of a merger sealed in the wasteland known as the "dotcom bust."

Continue reading Microsoft to unload Razorfish, Publicis looking?

Microsoft to unload Razorfish, Publicis looking? originally appeared on BloggingStocks on Mon, 29 Jun 2009 09:00:00 EST. Please see our terms for use of feeds.

This story shows where integrity and greed, the good and the bad are present at all times in the market. Let's take trader A who follows the cardinal rules of trading. He holds an order to buy say $10 million of US treasuries. He knows that such an order will most likely drive the price up. He places his client's order first, then decides to piggy back him and places a trade for his own account after his client's trade is completed.

Trader B holds a similar order from a client to buy $10 million of US treasuries. But unlike trader A, he places an order for his own account first. So he already is in the market. After his trade is completed, he places his client's order which he believes will drive up the price. This practice is called "front running.

Continue reading Morgan Stanley and some of its former traders are fined for exchange violations

Morgan Stanley and some of its former traders are fined for exchange violations originally appeared on BloggingStocks on Wed, 27 May 2009 16:30:00 EST. Please see our terms for use of feeds.

Analyst upgrades:

• Citigroup upgraded Lennar (NYSE: LEN) to Buy from Hold as it believes the company's near-term liquidity profile is improved following the $400M debt issuance. The firm raised its target price to $12 from $11.
• Jefferies upgraded Rowan Companies (NYSE: RDC) to Buy from Hold as it believes jack-up drillers will continue to outperform deepwater names. The firm raised its target price to $27 from $20.
• Keefe Bruyette upgraded First Financial (NASDAQ: FFIN) to Market Perform from Underperform to reflect more positive loan data for the Texas banks. The firm raised its target price on shares to $44 from $38.
• MGM Mirage (NYSE: MGM) was upgraded to Overweight from Neutral at JP Morgan.
• Morgan Stanley (NYSE: MS) was upgraded to Outperform from Market Perform at JMP Securities.
• Brinker (NYSE: EAT) was upgraded to Overweight from Equal Weight at Barclays.

Continue reading Analyst upgrades, downgrades and initiations: LEN, RDC, FFIN, SII, AN, ACHN, UA, LULU, JST

Analyst upgrades, downgrades and initiations: LEN, RDC, FFIN, SII, AN, ACHN, UA, LULU, JST originally appeared on BloggingStocks on Mon, 18 May 2009 10:30:00 EST. Please see our terms for use of feeds.

Continue reading Doomsday Scenario: Higher unemployment, no IPOS, Twitter DOA -- already

Doomsday Scenario: Higher unemployment, no IPOS, Twitter DOA -- already originally appeared on BloggingStocks on Thu, 02 Apr 2009 16:30:00 EST. Please see our terms for use of feeds.

Morgan Stanley (NYSE: MS) closed at $22.13. MS is expected to report Q1 EPS soon. April option implied volatility is at 120; July is at 107; near its 26-week average of 113, according to Track Data, suggesting non-directional price movement.

Goldman Sachs (NYSE: GS) closed at $100.46. GS is expected to report Q1 EPS soon. GS April option implied volatility is at 87, July is at 81; above its 26-week average of 80, according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Options Update: Morgan Stanley options active into EPS, guidance and capital outlook originally appeared on BloggingStocks on Tue, 31 Mar 2009 09:05:00 EST. Please see our terms for use of feeds.

DailyFinance today: glimmers of hope vs. a global meltdown, oil prices dangerously low, should you sell stocks, and electric cars humming along despite turmoil originally appeared on BloggingStocks on Mon, 30 Mar 2009 18:15:00 EST. Please see our terms for use of feeds.

Analyst upgrades:

• JP Morgan upgraded J.C. Penney (NYSE: JCP) to Neutral from Underweight based on lower input costs, stabilization in home, lower markdown dollars, and valuation.
• Oppenheimer upgraded Novellus (NASDAQ: NVLS) to Perform from Underperform as it believes Novellus' market share has stabilized and that the company is a potential acquisition target. The firm raised its price target to $20 from $9.
• Bernstein upgraded ConAgra (NYSE: CAG) to Market Perform from Underperform citing strength in grains and moderating input costs.
• ConocoPhillips (NYSE: COP) was raised to Buy from Neutral at Goldman.
• China Housing (NASDAQ: CHLN) was upgraded to Buy from Hold at Roth Capital.

Continue reading Analyst upgrades, downgrades and initiations: JCP, NVLS, CAG, RJF, PCG, STP, AMZN, MS, MSFT

Analyst upgrades, downgrades and initiations: JCP, NVLS, CAG, RJF, PCG, STP, AMZN, MS, MSFT originally appeared on BloggingStocks on Fri, 27 Mar 2009 10:00:00 EST. Please see our terms for use of feeds.

Continue reading Morgan Stanley cancels golf tournament events

Morgan Stanley cancels golf tournament events originally appeared on BloggingStocks on Thu, 26 Feb 2009 09:10:00 EST. Please see our terms for use of feeds.

Tonight I am appearing on a Boston TV program to discuss whether there are other Madoff disasters lurking as well as eight lessons from 2008. The first half of the program will feature Congressman Barney Frank (D-MA) who chairs the House Financial Services Committee.

The TV producer suggested that I should give Congressman Frank some thoughts about how to fix the financial services industry if I get a chance to talk with him in the green room before the show starts. I am not sure whether I will get to do this or not; however, here are four ideas I will share if I get the chance:

• Limit leverage. Starting with an SEC ruling in 2004, banks could borrow as much as they wanted -- in some cases over $30 for every $1 of equity. This borrowing has endangered the global financial system. Washington should limit leverage to 8:1 or less.
• Put banker pay in escrow. As I posted, banks should not pay bankers to close big deals and then let them keep the bonuses after the deals fall apart. Instead, they should do what Morgan Stanley (NYSE: MS) is starting to do, which is to put the bonuses in an escrow account -- if the deals lose money in the years following the contract signing, the money goes to pay off the investors. Otherwise, they get to keep the money.

Continue reading Memo to Barney Frank: Four steps to fix finance

Memo to Barney Frank: Four steps to fix finance originally appeared on BloggingStocks on Mon, 29 Dec 2008 17:30:00 EST. Please see our terms for use of feeds.

Wonder what happened to the hard earned money you paid in taxes? I can't account for all of it but $540 billion that went to six financial institutions is being used, in part, to operate 27 corporate jets. I may be the only one who feels this way, but I don't think the survival of the global economy depends on using taxpayer money to pay for financial executives to fly on their own corporate jets.

Here are the six financial institutions with the amount of taxpayer money they received and the number of corporate jets they're still flying:

• American International Group Inc (NYSE: AIG). $150 billion, seven corporate jets
• Citigroup Inc. (NYSE: C). $330 billion, four jets. (The $330 billion includes Citi's initial $25 billion in TARP money plus its more recent $305 billion in loan guarantees.)
• Wells Fargo & Co. (NYSE: WFC). $25 billion, one jet
• Bank of America (NYSE: BAC). $25 billion, nine jets -- its CEO Ken Lewis used $127,643 worth of its corporate jets
• JPMorgan Chase & Co. (NYSE: JPM) . $25 billion, four jets -- its CEO Jamie Dimon's personal use of its corporate aircraft totaled $211,182 in 2007
• Morgan Stanley (NYSE: MS). $10 billion, two jets -- its CEO John Mack's personal use of its corporate aircraft totaled $358,882 in 2007

Continue reading Six banks with $540 billion in bailout money still flying 27 corporate jets

Six banks with $540 billion in bailout money still flying 27 corporate jets originally appeared on BloggingStocks on Sun, 21 Dec 2008 15:44:00 EST. Please see our terms for use of feeds.

"The Fed lowered interest rates more than expected and in a way that has Wall Street talking; in fact, the stock market is setting up a potentially bullish technical formation," technician Mark Leibovit, editor of Volume Reversal Survey -- often ranked among the top performing market timing services.

He reports, "The market expected a 50 basis point cut to 0.5% with a chance of a 75 bp cut to 0.25%. Some even called for a rate of 0%. The Fed made a lot of people happy, though a bit confused, by lowered the Fed Funds rate target to a range of 0% to 0.25%.

"This is the first time the Fed has lowered rates to a range instead of a an actual number. It also bring the Fed Funds rate to its lowest target rate ever. The Fed also pledged to use "all available tools" to combat a severe financial crisis and prolonged recession. The stock market likes the lower interest rate and the Dow is up 360 points, the S&P is up 44 and the NASDAQ is up 81.

"As I write, all nine market sectors are trading higher, led by Financials which are up 9.8%. Goldman Sachs (NYSE: GS) is up 17.2% after reporting its first quarterly loss as a public company.

Continue reading Top timer sees bullish technicals after rate cuts

Top timer sees bullish technicals after rate cuts originally appeared on BloggingStocks on Tue, 16 Dec 2008 16:52:00 EST. Please see our terms for use of feeds.

According to a Dow Jones report this morning, Citigroup (NYSE: C) has decided to cancel the Christmas party planned for its fixed-income staff in London. The soirée was supposed to be held this Thursday, December 11, but the financial firm apparently decided it was inappropriate to celebrate, considering the 52,000 job cuts it recently announced. The party's cancellation comes shortly after Citi scrapped a holiday celebration for its London equities division, which would have been held December 3.

Today's news from Citigroup is simply the most prominent report among a growing trend this year for U.S. corporations. In my own neighborhood, I can name more than a few companies who've axed their own Christmas plans in deference to the sorry state of the U.S. economy, as well as the continually growing unemployment rolls. It may be the holiday season, but it's harder than ever to find members of the working class who feel like celebrating.

If there's a silver lining to the anti-holiday mood, it's probably the growing trend toward prudent sacrifice among major corporations. Yesterday, we learned that executives at Morgan Stanley (NYSE: MS) and Merrill Lynch (NYSE: MER) will forgo bonuses -- and regular pay, in some instances -- along with many of their peers at other investment banks. Is it the least these guys could do? Maybe. But, as any addict can tell you, the first step toward recovery is admitting you have a problem. Now that top executives are starting to shoulder some of the blame, Wall Street could finally be ready for rehab.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Holiday parties scrapped at Citigroup and others -- Wall Street ready for rehab? originally appeared on BloggingStocks on Tue, 09 Dec 2008 12:45:00 EST. Please see our terms for use of feeds.

I have been posting so much bad news over the last couple of years that I thought it would be interesting to try something different for a change: look for something that's truly good. If I can find it, I'll tell you what the good news is, why it's important, and what it means for the rest of the world. Today's installment: Morgan Stanley (NYSE: MS) new approach to paying bankers -- which has the potential to keep what broke Wall Street from happening in the future.

Morgan Stanley has decided to create a program to claw back bonuses if the firm loses money in the future. Instead of paying out tens of millions to bankers all in the year they make it, Morgan Stanley will hold the cash in an account and dole it out over three years. The clawback would be triggered by the need for a restatement of results, a significant financial loss or other reputational harm to Morgan Stanley.

Why does this matter? What the current financial crisis tells us is that it doesn't make sense to do big deals if they end up losing money in the future. That leaves someone else -- in this case government to clean up the mess while the people who made those deals keep their millions.

How so? In 2007, bankers made a total of $38 billion in bonuses alone -- even though their shareholders lost $74 billion in stock market value. That's because their reported profits were fake. In the last few years the top nine banks have reported $305 billion in profits -- but since then they've taken $323 billion in write-offs.

Continue reading Good News Watch: Morgan Stanley gets the message on pay

Good News Watch: Morgan Stanley gets the message on pay originally appeared on BloggingStocks on Tue, 09 Dec 2008 09:52:00 EST. Please see our terms for use of feeds.

Merrill Lynch analyst Guy Moszkowski had some harsh words this morning for Goldman Sachs Group (NYSE: GS). Rather than a fourth-quarter profit of $2.98 per share, the analyst now expects Goldman to lose 49 cents per share during the quarter. If his prediction comes to pass, it will mark the bank holding company's first-ever quarterly loss as a public company.

While Moszkowski razored his price target on GS from $159 to $100, he maintained his Neutral opinion on the stock. The new target represents a premium of 8.1% to the stock's closing price last Friday. The analyst cites the "stressed" equities market as the primary driver behind his dramatically reduced outlook on Goldman.

In a note to clients, Moszkowski explained that Morgan Stanley's (NYSE: MS) business mix should allow it to weather the choppy market conditions better than Goldman. He trimmed his fourth-quarter earnings forecast on Morgan as well -- dropping his estimate from 72 to 36 cents per share -- but considers the stock a Buy.

The analyst stated, "We still think GS remains in many ways at the forefront of the capital markets industry, but if it can't consistently produce a premium return on equity, it's not going to be able to continue to have the premium valuation multiple that it has enjoyed." As of last Friday's close, Goldman's forward price-to-earnings ratio of 7.63 dwarfed Morgan's ratio of 4.03.

In today's session, MS is up about 5%, compared to Goldman's gain of about 1.2%.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Skeptical analyst predicts fourth-quarter loss for Goldman Sachs originally appeared on BloggingStocks on Mon, 03 Nov 2008 11:18:00 EST. Please see our terms for use of feeds.

Credit-card concerns Visa, Inc. (NYSE: V) and MasterCard, Inc. (NYSE: MA) will be shelling out up to $2.75 billion to settle an antitrust suit with Discover Financial Services (NYSE: DFS). Specifically, MasterCard will pay Discover $862.5 million in the fourth quarter, while Visa will fork over $1.89 billion over the course of 2009. Following the release of the settlement's details, an analyst at Keefe, Bruyette & Woods is weighing in favorably on all three firms.

Sanjay Sakhrani called the news "a big win for Discover, as it provides an additional cushion to contend with the implications of a weaker U.S. economy." He expects the payments will add about $1.75 to Discover's earnings per share. However, he also cited the report as an upside catalyst for MasterCard and Visa, as it eliminates an overhang on shares of both companies -- an assertion supported by analyst Julio C. Quinteros, Jr., of Goldman Sachs.

Unfortunately, though, it's not all sunshine and rainbows in the credit-card group today. Morgan Stanley (NYSE: MS) has filed its own suit against Discover in New York State Supreme Court, alleging that it's entitled to a chunk of the $2.75-billion settlement. DFS was spun off from Morgan Stanley last year, and the latter company claims that it should receive a portion of the award under the terms of a special dividend agreement.

Not so fast, says Discover, which alleges that its parent company is in violation of their spinoff agreement, and "the amount of Morgan Stanley's special dividend is a matter of dispute." Morgan fired back that "there is absolutely no basis for Discover's claim that the agreement was breached." Stay tuned to see how this credit-card drama plays out -- in early trading, shares of all three credit card companies were higher.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Visa, MasterCard settle with Discover, but what about Morgan Stanley? originally appeared on BloggingStocks on Tue, 28 Oct 2008 11:11:00 EST. Please see our terms for use of feeds.

Continue reading Boxing on Wall Street: Wouldn't you love to watch traders get beaten?

Boxing on Wall Street: Wouldn't you love to watch traders get beaten? originally appeared on BloggingStocks on Mon, 27 Oct 2008 17:20:00 EST. Please see our terms for use of feeds.

Goldman Sachs analyst William Tanona reinstated coverage of Citigroup Inc. (NYSE: C) today with a s Sell rating and a six-month price target of $11. In a note to clients, the analyst wrote, "We believe weak economic data will keep the stock under pressure over the next six months, and it is tough to see why the stock would head higher over this period."

In fact, Tanona expects the shares to decline. Citigroup closed yesterday at $15.09, which means the analyst expects about 27% downside during the next six months. To emphasize the depths of his bearish sentiment, Tanona added Citigroup to Goldman's "conviction sell" list, and warned that the Dow component may not return to profitability until the second half of 2009.

On the other hand, the broker feels bullish toward Morgan Stanley (NYSE: MS), which he expects to generate profits over the next four quarters. He cited Morgan's limited exposure to consumer credit as a positive catalyst for the stock. In order to play on these starkly contrasting expectations, Tanona recommended a paired trading strategy on the two banks; he advises investors to go short Citigroup and long Morgan Stanley.

In morning activity, traders seem to be taking heed -- Citigroup shares are down 2.8%, while MS is approaching a 4% gain.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

Goldman Sachs adds Citigroup to 'conviction sell' roster originally appeared on BloggingStocks on Tue, 21 Oct 2008 10:30:00 EST. Please see our terms for use of feeds.

The U.S. decided it could not allow another investment bank to fail. And if it had allowed Morgan Stanley (NYSE: MS). to file for bankruptcy -- as it did with Lehman Brothers -- that would not have happened. Why not? Because Morgan Stanley is now a commercial bank. But thanks to a guarantee from the Treasury and a change in the structure of its deal, Morgan Stanley has skated away from bankruptcy.

That's because Mitsubishi UFJ negotiated a new deal with Morgan Stanley. Instead of buying a mixture of common and preferred stock, Mitsubishi will acquire a 21% stake in Morgan Stanley by purchasing $9 billion worth of its preferred stock yielding 10%. More specifically, $7.8 billion of the Mitsubishi investment is in preferred shares which its can convert into Morgan Stanley common at $25.25 per common share. The other $1.2 billion is in perpetual noncumulative preferred stock that is not convertible into Morgan Stanley stock.

Why the change? Previously $3 billion of Mitsubishi's stake was to be in common stock purchased for $31.25 a share, but after Morgan Stanley's stock fell 58% last week -- this deal would have been embarrassing to complete. This weekend I was thinking about buying Morgan Stanley stock but I held back because I thought that the Treasury might inject senior preferred capital into Morgan Stanley which would drive down the value of its common.

Continue reading Morgan Stanley saved

Morgan Stanley saved originally appeared on BloggingStocks on Mon, 13 Oct 2008 10:45:00 EST. Please see our terms for use of feeds.

The SEC's ban on short selling ended Thursday. This creates the conditions to resume the cycle of value destruction that brought down Lehman Brothers Holdings. What happens is that a threat of a credit downgrade causes a spike in the premiums for credit default swaps (CDSs) that insure the bank's debt. That premium spike requires a collateral call which the bank lacks the cash to meet. This jeopardizes its effort to raise capital and sends the stock plunging -- to the profit of the short sellers.

Enter Morgan Stanley (NYSE: MS). A few weeks ago, it announced that it would raise $9 billion from an investment from Japanese bank Mitsubishi UFJ Financial Group, which is due to close on October 14th. However, the $25 a share purchase price is now about double Morgan Stanley's closing stock price Thursday. If the $9 billion capital commitment remains constant, MUFJ would own 65% of Morgan Stanley rather than the original 21%.

And this morning, a report emerges that Moody's (NYSE: MCO) will put $200 billion of Morgan Stanley's debt on downgrade watch -- helping drive its stock down 27% in pre-market. As happened at Bear Stearns and Lehman, hedge fund clients have pulled out their money and its CDS premiums are up so much that it can't issue new debt. Specifically, Morgan Stanley's 5-year CDSs rose to an upfront payment of 28% of the amount insured -- yesterday it was 19% -- plus 5% percent a year. So Morgan Stanley would pay $2.8 million to insure $10 million of debt plus $500,000 a year.

Continue reading Is Morgan Stanley the next to fail?

Is Morgan Stanley the next to fail? originally appeared on BloggingStocks on Fri, 10 Oct 2008 09:35:00 EST. Please see our terms for use of feeds.