Thursday, August 6, 2009

Quiet Day, except for...

A Washington Times release stating the White House as saying: The War on Terrorism is Over. Ok, but who won, is my question.

Enough about that, though. The big finance news story (and I'm kinda surprised this hasn't been the headline of the day) is Morgan Stanley is buying back its TARP warrants for $950 million. As a reminder, Goldman did the same last month at the tune of $1.1 billion. Want to know the best part: The Gov't earned a solid 20% return on this "investment".

That's right, according to, 'Morgan Stanley said that including dividends, its payments to the government will total $1.26 billion, a 20 percent annualized return on its investment last fall'. Actually, the Treasury "investment" took place in October--Oct. 28th to be exact.

Now, I know what you're thinking, but why is the Gov't getting any return at all, yet alone an annualized pop of 20%?!? Well, our LandColt analysts were doing some research (in addition to calling our associates on Wall Street) and we came to the realization on something:

The Government probably should get more! Seriously, take a look at the retail funds Morgan Stanley offers. They are rocking--doing awesome. As a matter of fact, only one fund in MS inventory is down during the period the firm had the TARP cash. Simply incredible for an asset manager to post the returns that they did.

I'm not saying it's all based on the TARP money--actually, the TARP "investment" will have absolutely no bearing on the fund performance. But, their fund managers must be geniuses--so imagine what kind of return (if any, of course) MS was able to bring in off of the original $10billion TARP "investment"?!?

Take a look when you can: 11 of the 19 MS funds offered have performed north of the 20% Gov't return since MS accepted the "investment" back on 10/28. And, of the other eight, three funds posted double-digit returns.

Also--take a look at the stock: +108% (going into today, tho) since MS got involved with the Treasury. I don't know about you folks, but champagne all around for John Mack and company. LandColt will be dropping off a case Cristal at the 1500 block of Broadway this afternoon!

Congrats guys! Nice work.

Todd M. Schoenberger
LandColt Trading

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