The Speculations Of Morgan Stanley
Dr. Duru | Jan 03, 2018 02:37AM ET
The raging bull market has helped facilitate instant excitement any time a company announces a cryptocurrency-related project or product. Xunlei Ltd Adr (NASDAQ:XNET) is one of several companies that have enjoyed such a boost. XNET soared from just over $4 to $25 in less than two months on the heels of crypto-news.
Xunlei Limited (XNET) is riding a crypto-surge.
I think of such stocks as the playthings of speculators, so I was very surprised to see news on December 29th that Morgan Stanley took a 5.1% passive stake in XNET. I shared the news with a trader friend because I concluded the Morgan Stanley (NYSE:MS) endorsement ended the opportunity to short the stock. He agreed and informed me that MS has recently disclosed stakes in other very speculative. Wondering whether there is more to this story, I decided to check out the SEC 13G filings myself. Sure enough, since November, MS has disclosed several of speculative stakes.
I only looked back to late November, but I found a sufficient number of filings of interest. I list them below by the date of the disclosed ownership. The SEC filing typically gets released about a week after the date of the ownership stake. I put an asterisk by the names I consider particularly speculative. The percentage stake is listed along with the name of the company. A link to the SEC filing is provided on the date. I include charts of particular interest.
November 20 : Pennymac Fnl Ser (NYSE:PFSI), 5.3%.
PennyMac Financial (PFSI) started 2018 with an upside resolution to a Bollinger Band (BB) squeeze.
*November 27 : Atara Biotherapeutics Inc (NASDAQ:ATRA), 5.0%
Get The News You Want
Morgan Stanley loaded up on Atara Biotherapeutics, Inc. (ATRA) just in time to enjoy some good news from the FDA.
*November 30 : SharpSpring Inc (NASDAQ:SHSP), 1.1%
SHSP is the one of two single-digit stocks on the list. It is also a micro-cap stock, so I am very curious to uncover what Morgan finds so special about this small Florida-based internet services provider.
With a market cap of 36M and average daily volume of 77K, hardly anyone else besides Morgan Stanley is paying attention to Florida-based internet service provide SharpSpring (SHSP).
November 30: BlackRock 2022 Global Income Opportunity Trust (NYSE:BGIO), 10.2%
*November 30: Overstock.com (NASDAQ:OSTK), 11.4%
This position caught my interest most of all. First of all, this stake is Morgan’s largest of the ones I found. Secondly, OSTK has become a crypto/blockchain play which means, combined with the XNET position, Morgan is clearly trying to make big moves in the space.
Overstock.com (OSTK) is well-supported by its uptrending 50-day moving average (DMA) as it rides a crypto/blockchain-surge.
November 30: Highland Floating Rate Opportunity Fund (HFRO), 14.6%
*December 4: Diana Containerships Inc (NASDAQ:DCIX), 5.3%
Of all the speculations in this list, DCIX baffled me the most. I think the chart stands by itself for generating bewilderment; DCIX traded over $700,000/share in 2011. I do not even want to count the number of reverse splits that DCIX has implemented since then.
This weekly chart of Diana Containerships (DCIX) is enough said! DCIX traded above 700,000 in 2011…
*December 7: Apptio Inc (NASDAQ:APTI), 5.2%
Apptio, Inc (APTI) has business in another hot area: cloud-based, software-as-a-service platforms.
*December 7: Roku Inc (NASDAQ:ROKU), 5.1%
Roku, Inc. (ROKU) is a recent IPO that caught fire after posting earnings.
December 22: Asbury Automotive Group Inc (NYSE:ABG), 5.3%
*December 29: PHH Corp (NYSE:PHH), 5.5%
PHH Corporation (PHH) had a rough 2017.
I cannot say whether Morgan Stanley has been any more speculative than usual. This exercise just opened my eyes to the range of speculation that the big boy financial institutions may dare to enjoy. I will check back on these names from time-to-time and perhaps add to the list as Morgan adds to its docket. Since some of these passive stakes have already paid off handsomely for Morgan, I suspect the gold is not done here.
Be careful out there!
Full disclosure: short OSTK shares, short OSTK call spread (note – I will not be holding these positions much longer now that I know about Morgan’s extra large stake!)
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