NEW YORK (TheStreet) - After beating diminished fourth quarter estimates,
Morgan Stanley shareholders rooting for a stock buyback jolt should consider a different alternative: a buyout of
Citigroup's 49% stake in Morgan Stanley Smith Barney.
With a looming May option to increase its stake in the two-year old venture that created the world's largest wealth manager, overtaking the "thundering herd" of Bank of America Merrill Lynch, Morgan Stanley now has to decide whether taking a bigger stake in the venture can lift earnings and outweigh or supplement share buybacks.
Morgan Stanley CEO James Gorman
While Morgan Stanley's Chief Executive and newly appointed Chairman James Gorman deferred a decision on the brokerage venture or share buybacks to 2012, calculations by Credit Suisse show that ownership of Morgan Stanley Smith Barney may be the best way for the bank to use its capital to bolster earnings and returns on equity. For Gorman, who previously headed the bank's wealth management division and cut his teeth at Merrill Lynch, a brokerage move would mesh with his background.
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