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Things Getting Hairy For MS As CIC Dumps Another 4.6 Million Shares
Yesterday we reported that it was recently disclosed that the bleeding Chinese sovereign wealth fund CIC had sold 5.1 million shares in the prior week - speculation was rife that this was merely a rebalancing trade to keep the firm's total holding under 10%. Dow Jones now reports that CIC sold another 4.625 million shares of the bank holdings the fund responsible for the single biggest loss in Wall Street history. After this most recent transaction, CIC now owns 9.5% of the common in Morgan Stanley. It now appears that the selling will continue due to the overhang of several convertible issues which will continue to add to CIC's share ownership, thus placing further downward pressure on the stock over the next several weeks as the size of the sales will be material: "CIC may need to continue selling shares to keep its share of Morgan Stanley less than 10% of the investment bank's shares. That's because the Mitsubishi UFJ preferred shares won't have converted before CIC's units convert, so CIC would technically own a larger percentage of Morgan Stanley's outstanding stock." Of course, this could simply be good old fashioned unwinding. Keep an eye out on the total MS holdings by CIC, and also keep an eye out for when (hopefully sometime over the next decade) the Chinese US Treasury recycling outfit will finally issue its next 13F.
Form Dow Jones:
NEW YORK -(Dow Jones)- China Investment Corp. continued to sell shares of Morgan Stanley (MS), unloading another $125 million of the stock, according to a recent filing with the U.S. Securities and Exchange Commission.
The stock sale, made in two separate transactions, follows CIC's $138.5-million sale of 5.1 million of the investment bank's shares last week. CIC, whose stake in Morgan Stanley rose to more than 10% last month, may have sold the shares to avoid more regulatory scrutiny as ownership above that percentage could mean additional disclosure requirements.
In the latest filing, dated Tuesday, China's sovereign wealth fund said it sold 1.875 million common shares at $27.05 each on July 23 and another 2.75 million common shares at $27.04 each on Monday, for a total of 4.625 million shares.
CIC, which began purchasing Morgan Stanley shares in late 2007 with a $5.6 billion investment, said it had 166.5 million Morgan Stanley common shares after the two transactions.
The wealth fund now has about a 9.5% equity ownership stake in Morgan Stanley, based on 1.75 billion fully diluted shares outstanding during the second quarter. The diluted figure includes 116 million in mandatory-convertible equity units, yielding 9%, that CIC bought in Dec. 2007 for $5.6 billion and are set to convert into common stock on Aug. 17. It also includes 310 million shares issuable to Mitsubishi UFJ Financial Group Inc. (MTU) upon conversion of the Series B preferred stock the Japanese financial-services company owns.
CIC may need to continue selling shares to keep its share of Morgan Stanley less than 10% of the investment bank's shares. That's because the Mitsubishi UFJ preferred shares won't have converted before CIC's units convert, so CIC would technically own a larger percentage of Morgan Stanley's outstanding stock.
The bulk of CIC's stake comes from the mandatory convertible units. Most of rest comes from a June 2009 offering where CIC bought Morgan Stanley shares at $27.44 a piece.
A Morgan Stanley spokesman declined to comment. A CIC spokesman couldn't immediately be reached for comment.
Shares of Morgan Stanley recently traded up 0.6% at $27.12.
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It's certainly been flat for the past week. I would have thought these sales would have more of an impact.
Ouch. But true. The foreign fascination with seeing what FinReg entails is over. And there will not be exits wide enough.
Who wants to bet that the "UK" will suddenly start buying large quantities of MS shares?
While I understand that the PTB/PPT/MSM/ECB/Fed can keep the charade going for quite some time, the cracks are showing more and more. Can it be that China's both needing the money but also seeing the writing on the wall?
Dubai's default, Iceland's default, Hungary/IMF, the entire EU bailout mechanism/ponzi scheme. The CA state of emergency. Illinois not paying $5 billion in bills (isn't that a default?). The China land/ponzi schemes with empty buildings and cities.
It's simply surreal. It seems we are the in final throws of it all.
"A Morgan Stanley spokesman declined to comment"
And the CIC spokesman refused to answer his cell phone...
What's the filing I would have to search for if I want to read the abovementioned SEC file?
Let the liquidations begin. Wall Street will one day be an ugly relic of history. A representation of hubris and all that is vile and evil with humanity. I look forward to DOW Zero when the wankers will have to actually work for a living rather than being parasites on the skin of humanity.
All things considered, the stock seems to be holding up ok, so far anyways.
Dang, I must be getting old....I got the math question wrong.
Isn't it funny how most of us are rooting for a collapse of the system while simultaneously shorting it? What am I supposed to short in the future?
If youthought deleveraging in the USA caused havoc in the world in 2008, wait for China in 2010.
4,600,000 shares @ 27.00 = $124,200,000
Who is on the other side of the trade and willingly "investing" over one hundred million into this Wall Street whore of a bank?
it ain't 100 share increment HFT bids keeping this up, that's for sure.
aye, 'tis the question...random guess (for shoots & googles):
D. LeRock?
chump change. ms hasn't even filled the gap from last week. the stock wants to go higher.
yes good post. the market is waiting for the CIC to give up on the EUR, so that ECB
1.20 breach is destroyed.
Whatever happens to MS, John Mack is to be commended for vowing, in the depths of phase 1 of the crisis, "to take the firm down" instead of selling itself to JPM for $1 and for instructing his assistant to "Tell Tim Geithner to go get fucked". JM's got class.