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An Honest Mistake? Is China Investment Corp Dumping Morgan Stanley Shares Merely For Threshold Reporting Purposes

Tyler Durden's picture




 

One of the odder stories of the day comes from Dow Jones, which reports that the Chinese Sovereign Wealth Fund (China Investment Corp, or CIC), has sold $138.5 million worth of Morgan Stanley shares in the past week, after dumping 4.53 million shares at $27.17 on Wednesday and 575,000 shares at $27.13 on Thursday. CIC began accumulating a massive Morgan Stanley stake in 2007, when it purchased its initial shares in the then troubled investment bank, and followed up with a June 2009 $1.2 billion investment, The reason for the sale, DJ speculates, is for the fund to avoid "additional disclosure requirements." Yet as a filing as recently as June 18 disclosed, the fund's Morgan Stanley stake was openly disclosed to be 11.64%. Surely the CIC administrator, the PM and everyone else in the front and back office were all too aware of this number. Which is odd since per both initial and follow up purchase agreements, CIC had stated it would not own more than 9.9% of MS' shares, and would remain a passive investor. That the firm would blatantly purchase 16% more than this threshold in the open market by mistake in the past year seems somewhat ludicrous. Worth recalling is that in June CIC disclosed a 10% MTM loss for the month of May, or roughly about the time it announced its above normal MS exposure. Are the two related? Has the CIC been covertly liquidating assets? It is unclear, as the one and only 13F for CIC is still the original one filed from February (covered here). One would imagine there would be at least some SEC requirement that a filer that has issued at least one 13F would be so kind to follow it up with at least a second one... eventually. In the meantime there is no official statement on the transaction: "A spokeswoman for CIC said she was unaware of the reason for the sales. A Beijing-based Morgan Stanley spokeswoman declined comment."

 

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Tue, 07/27/2010 - 17:06 | 491017 whatsinaname
whatsinaname's picture

fyh dollah fyh dollah

Tue, 07/27/2010 - 17:15 | 491024 Robslob
Robslob's picture

I can't resist. "Gold"man bitches?

Tue, 07/27/2010 - 17:19 | 491028 walküre
walküre's picture

"CIC began accumulating a massive Morgan Stanley stake in 2007, when it purchased its initial shares in the then troubled investment bank"

Burn me once, shame on you.

Burn me twice, shame on me..

$27 average share price is better than nothing.

The TBTF will not be so lucky 2nd time around. There's no more bailout or TARP when the next shoe drops.

As a large shareholder we can assume that CIC did their due dilly and disected the balance sheet and operational outlook for MS. My guess is that it is not that healthy and rosy as the pundits for a recovery would have us believe.

 

Tue, 07/27/2010 - 17:21 | 491031 reader2010
reader2010's picture

Buy High Sell Low. The Chicom's full of sophistication. 

Tue, 07/27/2010 - 17:57 | 491069 walküre
walküre's picture

At what point do you concede a loss?

Does MS share price really have any room to go upward in H2 and more importantly, during 2011 / 2012?

Once we're 2 more years into this, I would argue that CIC sold MS at the "then" top.

See, the markets are not just subject to Fed manipulation. There are other parties involved that are doing their homework and they have an interest to sell whether the Fed likes it or not.

 

Wed, 07/28/2010 - 00:30 | 491485 JW n FL
JW n FL's picture

"Mr. John Mack is Chairman and former CEO of Morgan Stanley;"

Nice read... good, quick and to the point. Thanks for making it easy!

Wed, 07/28/2010 - 03:27 | 491561 Lux Fiat
Lux Fiat's picture

Looks like they want someone who knows where the bodies are buried.

Tue, 07/27/2010 - 17:26 | 491038 George the baby...
George the baby crusher's picture

A spokeswoman for CIC said she was unaware of the reason for the sales. 

Hours of deriving laughter. 

Tue, 07/27/2010 - 21:33 | 491322 nmewn
nmewn's picture

No more lovey long time...you pay now.

 

Tue, 07/27/2010 - 17:42 | 491053 DenverDevil
DenverDevil's picture

The selling here does smell like a SEC action could engulf MS. Another GS like settlement would put another cherry on the top of the careers of many strapping young future associates.

Tue, 07/27/2010 - 21:10 | 491289 ethandb@gmail.com
ethandb@gmail.com's picture

This is a ridiculous comment.  "Selling here does smell like a [sic] SEC action could engulf MS".  Yeah, CIC got word of an SEC action and they're getting out!!!!  YEAH, that's it!!!!!!!1  This is a decent blog, put some thought into it... DenverDevil.

Tue, 07/27/2010 - 18:12 | 491090 Remington IV
Remington IV's picture

Dumbest of dumb money

Tue, 07/27/2010 - 19:42 | 491196 deadhead
deadhead's picture

I say MS sees teens again.....

 

I would like to reiterate that our glorious banking system still has a ton of crap on the balance sheets and many are near insolvent on a mark to market basis.  once people get their heads out of their asses and realize that those assets are not coming back, it's gonna be one hell of a rush to the exits.

 

it's not different this time...........

 

Tue, 07/27/2010 - 21:08 | 491285 mee-mee-mee
mee-mee-mee's picture

What do they know we dont?

 

Tue, 07/27/2010 - 21:59 | 491356 Iam_Silverman
Iam_Silverman's picture

Looking at a 5 year chart, MS sold at 88.48 in July of 2007.  In July of 2009 it looks like it was going for 25.94.  Isn't that about the time that everyone was sure we were just about to turn the corner and the financial sector had just been "healed"?  When was it that Warren Buffet jumped into bed with G-S?

Tue, 07/27/2010 - 22:10 | 491365 nwskii
nwskii's picture

when 1.2 billion exits people listen (at a loss)

Wed, 07/28/2010 - 00:34 | 491487 JW n FL
JW n FL's picture

see above on how the sale was brokered... team player that Mack..

Tue, 07/27/2010 - 23:40 | 491454 Privatus
Privatus's picture

Who needs a conspiracy theory to sell Morgan Stanley?

Wed, 07/28/2010 - 03:10 | 491556 No More Bubbles
No More Bubbles's picture

The selling would certainly explain the recent "strength" in the stock.

Amazing how the crooks can push garbage up while it's being sold, to distribute their trash to the plentiful clowns buying all these bloated pieces of worthless paper........

Wed, 07/28/2010 - 04:52 | 491583 George the baby...
George the baby crusher's picture

I was lying on a couch drinking a glass of champagne, Bubbles all over my face.  When I woke in the morning, Bubbles was gone.

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