In our 9/17/08 note (Morgan Stanley (MS): "Rumors and Fear"), we called out the obvious that John Mack's blaming of the short sellers for his stock price decline was ridiculous and alarmist all at once. Prime Brokerage clients (hedge funds) don't like to be blamed for being the customer, nor do they appreciate having the CEO of MS engineer a short selling ban alongside his cronies at the SEC.
The result of his reactive behavior? Here's what MS disclosed on this front in their 10Q this week: "Subsequent to August 31, 2008, the company’s prime brokerage business experienced significant outflows as clients withdrew some of their cash balances and reallocated positions. These outflows will negatively impact prime brokerage’s operating results in Q4 of fiscal 2008."
The result of his reactive behavior? Here's what MS disclosed on this front in their 10Q this week: "Subsequent to August 31, 2008, the company’s prime brokerage business experienced significant outflows as clients withdrew some of their cash balances and reallocated positions. These outflows will negatively impact prime brokerage’s operating results in Q4 of fiscal 2008."
- Our price target for MS moved down a penny from Thursday. We're now at $9.02/share.
KM
(Chart courtesy of stockcharts.com)
