• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Charting Morgan Stanley's $60 Billion Crushing Of IPO Animal Spirits

Tyler Durden's picture


Last Friday we presented the dismal performance (and major divergence with broad equity markets) of recent IPOs and reflected on what this meant for the millions of retail investors who were 'suckered' into these must-win dot-com-renaissance names. Again and again one name keeps coming up with regard to the worst-performing and most-1999-dot-com #fail-like names - Morgan Stanley. Since November of 2011, Morgan Stanley has 'successfully' brought three of the biggest disasters of Silicon Valley to market - GRPN, ZNGA, and of course, most recently, FB. What is stunning is that since the GRPN IPO on 11/3/11, investors in these three 'new' normal names have lost an incredible $58 billion in market cap with GRPN and ZNGA now down 70% from their IPO price and FB down 44%. Perhaps more intriguing is that IPOs keep coming as there appears to be a 'muppet' born every day.

The performance of Morgan Stanley's Big-3 IPOs post-launch...


and the retail-investor animal-spirit-crushing reality of a $60 Billion suck out...


Source: Bloomberg

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Tue, 08/14/2012 - 10:08 | 2703618 pods
pods's picture

Maybe we need MS to IPO inflation?


Tue, 08/14/2012 - 10:16 | 2703637 Pladizow
Pladizow's picture

Qudos to MS - sheep are to be slaughtered!

Tue, 08/14/2012 - 10:25 | 2703658 max2205
max2205's picture

Transfer of wealth

Tue, 08/14/2012 - 10:58 | 2703761 aint no fortuna...
aint no fortunate son's picture

Its a village of muppets

Tue, 08/14/2012 - 11:11 | 2703787 Jay Gould Esq.
Jay Gould Esq.'s picture

Is it, though ?

Is it the "retail sucker" who buys into the opening day hype, or banks of trading computers, working in algorithmic sequence ? To wit: MANU's introduction. How could "retail" trading patterns explain what was, in essence, a 31.8 million share perfectly straight-line opening day price pattern ?

Indeed, the muppets have wisened, and have employed what can only be called the "Oscar the Grouch" garbage can/"bunker" strategy: bonds...and a crowded garbage can that trade now presents.

Tue, 08/14/2012 - 12:27 | 2704050 Nobody For President
Nobody For President's picture

You got that right, Jay. The 'millions of retail investors' have been fleeing the market/casino for three years now. Of course there were some retail investors jumping in with their 401Ks to get 'in on' the hot internet IPOs (shades of the 90's); but is was almost certainly institutional algos jumping on these puppies, because they are most of what's left. Hopefully, many of the individuals that got burned are first-time new investors, and will have learned just WHY so many individuals have left the so-called market these past few years.

Tue, 08/14/2012 - 10:29 | 2703677 MillionDollarBonus_
MillionDollarBonus_'s picture

$20 should continue to act as solid support. Although FB's earning were dissapointing, it's worth noting that revenue beat expectations, and it's only a matter of time before Facebook's senior management improve margins and start turning a healthy profit. 

Tue, 08/14/2012 - 10:37 | 2703686 Clueless Economist
Clueless Economist's picture

Your grandkids are going to refer to you as dumbass Grandpa MDB

Tue, 08/14/2012 - 10:48 | 2703720 Pladizow
Pladizow's picture

Are'nt trolls are sterile?

Tue, 08/14/2012 - 11:28 | 2703852 CIABS
CIABS's picture

MillionDollarBonus_:  There's only one "s" in "disappointing".

Tue, 08/14/2012 - 10:40 | 2703701 azzhatter
azzhatter's picture

still dollar cost averaging?

Tue, 08/14/2012 - 10:51 | 2703742 GMan_
GMan_'s picture

were you dropped as a child?

Tue, 08/14/2012 - 11:18 | 2703829 tabasco71
tabasco71's picture

Thats surely a rather long investment timeframe...

Might it not be possible for some other asset categories to produce returns during the time that investments in FB sit underwater ?

Tue, 08/14/2012 - 11:30 | 2703857 Bay of Pigs
Bay of Pigs's picture


We'll see on thursday when 268M shares hit the market how much "support" there is at $20.

Tue, 08/14/2012 - 10:11 | 2703620 Abraxas
Abraxas's picture

The chart looks like my junior stocks performance (damn you KWN). I'm glad I'm not the only one loosing it (money).

Tue, 08/14/2012 - 10:28 | 2703669 CIABS
CIABS's picture

That'll teach you to invest based on KWN.

I'd like to hear an audio competition in which entrants do their best over-the-top imitation of Eric King saying "Eeeeeeeeegoonnnn Vonnnnn Greeeeeeyeerrrttzzz".

Tue, 08/14/2012 - 10:11 | 2703621 resurger
resurger's picture

You chose Facebook stock, and press "BUY"


A commercial on CNBC not long time ago...

Tue, 08/14/2012 - 10:25 | 2703657 Dr. Richard Head
Dr. Richard Head's picture

Was that for a TD America trade through PFG?  Might as well just dip your money in the toilet and flush. 

Tue, 08/14/2012 - 10:13 | 2703626 Dr. Engali
Dr. Engali's picture

Insiders did well and isn't that what really matters?

Tue, 08/14/2012 - 10:19 | 2703647 resurger
resurger's picture

We tell the muppets it is a ponzi bull, they say we will milk it!

Tue, 08/14/2012 - 10:13 | 2703627 CheapBastard
CheapBastard's picture

"Muppet Sodomology 101" is now being offered in the Fall semester to all third year business admin students.

Tue, 08/14/2012 - 10:13 | 2703628 Zola
Zola's picture

Notice the always present manipulation at the start to skewer the shorts before the tanking gets unleashed...

Tue, 08/14/2012 - 10:14 | 2703629 vbone
vbone's picture

pump and dump bros! what they say?

Tue, 08/14/2012 - 10:15 | 2703632 realtick
realtick's picture

Great charts - no bubbles or arrows!

Tue, 08/14/2012 - 10:15 | 2703633 LongSoupLine
LongSoupLine's picture



I'm certain the SEC is building a strong case at this very moment...whoops, it all just accidently fell into the shredder.

Tue, 08/14/2012 - 10:29 | 2703675 Dr. Engali
Dr. Engali's picture

They had a pretty strong case then MS turned around and bought  them all a subscription to the midget tranny porn sites so the SEC "lost" the case.

Tue, 08/14/2012 - 10:24 | 2703655 buzzsaw99
buzzsaw99's picture

they need to ipo a company with ticker symbol SHIT and see how much stock they can sell

Tue, 08/14/2012 - 10:25 | 2703656 Omen IV
Omen IV's picture

Morgan Stanley is a "reputable" professional firm with substantial IPO experience that knows what they are doing

im sure it will all work out for the best!

Tue, 08/14/2012 - 10:26 | 2703661 Jason T
Jason T's picture

yet this year, there are no occupy wall street protests... 

I guess the protestors can't afford the gas to get to NY

Tue, 08/14/2012 - 10:29 | 2703671 fuu
fuu's picture

Plus there are no places left to camp that will not result in clubs to the face.

Tue, 08/14/2012 - 10:28 | 2703673 Christoph830
Christoph830's picture

Protests are cyclical and tied to inflation.  Give it a few more months, they'll be back in full force.

Tue, 08/14/2012 - 12:14 | 2704000 ar01
ar01's picture

No joke: these days they drive around in vans in Manhattan flashing lights on buildings that say "99%"

Tue, 08/14/2012 - 19:01 | 2705266 BotMightFly
BotMightFly's picture

 Stop watching lame stream propoganda, even Today several occupy protests are in progress as I write.  Note: the foreign press is able to report more.  Apparently, it's harder to hand them money envelopes without a wire being obvious to HS and they are not so owned and operated.


Tue, 08/14/2012 - 10:35 | 2703683 adr
adr's picture

I hope the author isn't trying to make the case that IPOs are supposed to make retail investors money.

Every IPO of the past four years has been a scam to make well connected insiders and the "founders" of each company a boatload of money by transferred wealth.

The majority of the corporations don't actually have any real profit. Most are hundreds of millions or even billions in debt. Money spent to market the IPO. A company will spend more than ten times actual revenue on advertising to hype the company. The hope is the more the logo is seen, the higher their valuation will go.

The books are massively cooked, like Groupon, but nobody cares unless there is a major issue that outs the CEO for some past crime. The company gets hyped, and a company with no profit can get a multi-billion dollar valuation making every internal shareholder extremely wealthy on paper.

IPO wealth transfer day comes and the scam artists cash out. Nothing that resembles actual business need ever happen to make those running the corporation wealthy.

We thought peak fraud happened in 1999. I think I would invest in Pets.com over anything today.

Tue, 08/14/2012 - 10:39 | 2703696 Catullus
Catullus's picture

It's really more of a massive transfer of wealth more than anything. Again, you're better off playing blackjack or craps with half your money and buying PMs with the other half.

Tue, 08/14/2012 - 10:43 | 2703709 DOT
DOT's picture

Morgan Fukin Stanley a leader in financial innovation.

Last Spring they changed the stated goal for their MM accounts :

paraphrasing>>>>>  'try to hold the value (Ha!) of one dollar '

No gains, losses undoubtably on the way for those that stay.

Who reads all that crap anyway?

Tue, 08/14/2012 - 10:56 | 2703753 haskelslocal
haskelslocal's picture

IPO's are fine as long as they're priced right. ZNGA, GRPN and FB were Obviously primed with hope to suck the turnip as early as possible.

It exsposes a fundamental flaw with the proverbial "Moral Hazzard" of the inner workings that demonstrate all parties invloved want their scratch up front and will risk all reputation and futurre opportunity to get it. (If Morgan doesn't offer it someonelse will. If Zuck makes a billion so should we. etc.) Cracks in the system that show.

Tue, 08/14/2012 - 11:01 | 2703769 Meesohaawnee
Meesohaawnee's picture

milliondollar -bone head..aka robotrader

Tue, 08/14/2012 - 11:08 | 2703780 ATG
ATG's picture

"on a gray dawn in Washington, the following

colloquy occurred before a committee of the United States


Senator Couzens. Did Goldman, Sachs and Company organize the

Goldman Sachs Trading Corporation?

Mr. Sachs. Yes, sir.

Senator Couzens. And it sold its stock to the public?

Mr. Sachs. A portion of it. The firm invested originally in 10 per cent

of the entire issue for the sum of $10,000,000.

Senator Couzens. And the other 90 per cent was sold to the public?

Mr. Sachs. Yes, sir.

Senator Couzens. At what price?

Mr. Sachs. At 104, (up to 222.50)

That is the old stock . . . the stock was split two for one.

Senator Couzens. And what is the the price of the stock now?

Mr. Sachs. Approximately 1 3/4.


MS currently targeting $3:


And Options Overnight currently holds SPY puts:


Tue, 08/14/2012 - 11:14 | 2703809 Coldfire
Coldfire's picture

Moron Stanley. I'm holding my breath to see if 900 forensic accountants can be wrong....

Tue, 08/14/2012 - 11:15 | 2703819 Gloeschi
Gloeschi's picture

$60n? That's your "legal" Madoff right there.

Tue, 08/14/2012 - 11:22 | 2703838 nathan1234
nathan1234's picture

So when do you think Morgan Stanley will turn up in the Morgue ( of course with JPM)!



Tue, 08/14/2012 - 12:15 | 2704001 Ljoot
Ljoot's picture

Invert the second chart for MS's profits from the IPOs.


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