Loeb Makes Case for Morgan Stanley (MS) and Tesoro (TSO)
Besides discussing a controversial equity position in Herbalife (NYSE: HLF) today hedge fund Third Point, run by Dan Loeb, explained its rationale for taking equity positions in Morgan Stanley (NYSE: MS) and Tesoro (NYSE: TSO).
Regarding Morgan Stanley, Loeb said he believed the company was in the early innings of a turnaround.
"The bank's investment banking advisory and equity sales and trading businesses – which we know well from our perspectives as both investors and long-time satisfied clients – have consistently won top three market shares and are impressively positioned," said Loeb in a letter to investors.
Loeb pointed out that Morgan Stanley's stock currently trades at a 20 percent discount to tangible book. When it acquired its stake, at an average cost of $16.77 per share, MS traded at a 35 percent discount. At these levels, Loeb says he has a free call option on a promising restructuring.
Third Point's Tesoro call is based in Loeb's view that there is "significant hidden value in high-multiple assets like retail, pipelines, and General Partner interests". He also thinks impending transactions/projects are underappreciated and likes the company's shareholder-friendly management team. Loeb thinks TSO shares have potential to double.
Regarding Morgan Stanley, Loeb said he believed the company was in the early innings of a turnaround.
"The bank's investment banking advisory and equity sales and trading businesses – which we know well from our perspectives as both investors and long-time satisfied clients – have consistently won top three market shares and are impressively positioned," said Loeb in a letter to investors.
Loeb pointed out that Morgan Stanley's stock currently trades at a 20 percent discount to tangible book. When it acquired its stake, at an average cost of $16.77 per share, MS traded at a 35 percent discount. At these levels, Loeb says he has a free call option on a promising restructuring.
Third Point's Tesoro call is based in Loeb's view that there is "significant hidden value in high-multiple assets like retail, pipelines, and General Partner interests". He also thinks impending transactions/projects are underappreciated and likes the company's shareholder-friendly management team. Loeb thinks TSO shares have potential to double.