Your Adarsh™

Letz mint some ‘ka-ching’

*Time To Buy Morgan Stanley was Today ! $84.5

Tell me if my advice helps you in making some money. How about a lunch then? 😉 Read on…   

Short Term:


Morgan Stanley announced the long awaited spin off of its Discover Financial Services unit on June 30 to focus on its more lucrative securities business. The news was around since last December. The spin-off is structured as a tax-free dividend. Morgan Stanley is not keeping any shares. Shareholders will get one share of Discover common stock for every two shares of Morgan Stanley. Regular trading of Discover is scheduled to begin July 2 on the New York Stock Exchange under the stock symbol “DFS”. I don’t remember whether it was Citigroup or credit Suisse, but one of their analysts opined last Friday that Discover would fetch about $10-$14 initially on a P/E of around 10 (which has now almost become a norm for financial institutions). 

My Take:

 Considering $85.65 (as of now) for MS at a P/E of around 10.58 and Forward P/E of around 10.27 with a short ratio of 2.1 does not sound it is too costly. Also remember the 1.5% dividend MS pays. Though, people may argue that Citigroup is a better play out there. The spin off that would earn us some quick money/shares of Discover, and considering Morgan Stanley’s return on equity will rise without Discover, a capital-intensive business, I feel MS is a better play as of now. But I’ll wait the market to shrug off Bernanke’s comments on rate cuts (would be better to say rate rise now LOL). Look for a good dip down by the end of this week and get into MS by next Tuesday to receive Discover and add a great financial play to your portfolio. I see those rate rise signals would actually stop the recent run in the financial sector, in fact rather initiate a small drop unless there is some good news from the economic news section this week. 

Ideal buy as of now at 84 – 85:

I don’t think it’s going to change much, owing to the good news we have on board now. It won’t fall below 84…unless there is some huge drop with DOW, thanks to Bank Of America’s upgrade today.

Note: I ‘m not an authorized/certified money manager or an advisor. This is not an advice or a compulsion asking you or making you to buy the stocks mentioned above. I just give advices. It’s completely under your discretion to buy these stocks. These are just a few picks I’m advising you, decreasing your time to find this from the huge WALL STREET’s ocean. There are many other better plays out there…these are just a few who I like to play as of this moment. I don’t claim to be that kind of guy who beats S & P regularly by some x %. No legal proceedings regarding this can be made, as I never persuade anyone to invest/trade certain stocks.


June 6, 2007 - Posted by | Blogroll, Future Buys, Long Term, Profited

1 Comment »

  1. […] MS has given our short position a good run. We will get discover for our Long position soon and are … […]

    Pingback by *No Profit or Loss untill u SELL « Your Adarsh | August 9, 2007 | Reply

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