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Morgan Stanley (MS) Wealth Offers Share Trading of Private Firms
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Morgan Stanley’s (MS - Free Report) wealth management division is offering its customers a chance to trade the sought-after shares of private companies before they are available to the wider public. The news, reported by Bloomberg, stated that MS has taken this step because currently the startups that are considering initial public offerings are remaining private for a very long time.
Morgan Stanley’s private markets transaction desk will assist the firm’s wealth management clients who want to invest in the highly fragmented and opaque market for private shares.
By trading the shares of private companies, employees and some institutional investors are able to sell their stakes to accredited investors.
While such shares are fundamentally riskier because they are not liquid, more and more investors are being attracted toward such shares to capture the growth of companies that are ready to go public after years of remaining private.
Kevin Swan, the head of private markets solutions at Morgan Stanley Wealth Management, stated, “There’s been increasing pressure over the past number of years to get into these companies while the value creation is occurring rather than having to wait until the IPO. When investors have a need for liquidity, we want to be there to have a solution for them.”
Swan confirmed that MS does not intend to compete with platforms that already allow pre-IPO share trading to investors. Instead, Morgan Stanley will take an “open and agnostic approach” and work with external platforms as well as its different internal arms to complete trades based on each situation.
Per Michael Gaviser, the head of private markets at Morgan Stanley Wealth Management, the bid-ask spread (the difference between the highest price that a buyer is willing to pay and the lowest price that a seller is willing to accept) has narrowed as the startup market recovers following the Federal Reserve’s rate hike movement.
Gaviser said, “As that happens, you’ll see an exponential increase. What drives the market going forward? That narrowing of the bid-ask spread and people getting more comfortable with the state of the marketplace.”
Notably, Morgan Stanley’s wealth management segment contributed 48.5% of total net revenues in 2023. The segment provides brokerage and investment advisory services, financial and wealth planning services, annuity and other insurance products, credit and other lending products, cash management services, retirement services and trust and fiduciary services.
For the past few years, Morgan Stanley has been focusing more on its wealth management and investment management segments as these are less dependent on the capital markets and are less volatile revenue sources.
For this, the company made some strategic expansion efforts, including the buyouts of Eaton Vance, E*Trade Financial and Shareworks. Driven by these efforts, both the segments’ aggregate contribution to net revenues jumped to more than 57% in 2023 from 26% in 2010.
Also, the wealth management segment’s total client assets have witnessed a five-year (2018-2023) compound annual growth rate (CAGR) of 17.4%, while the investment management segment’s total assets under management have recorded a CAGR of 21.5% over the same period.
In another effort to focus more on the wealth management segment, Morgan Stanley is likely to add spot bitcoin exchange traded fund (ETFs) products to its brokerage platform.
The company has been evaluating offering spot bitcoin ETFs to clients ever since the Securities and Exchange Commission approved their introduction in January. Currently, there are ten spot bitcoin ETFs trading in the country.
Over the past six months, shares of MS have gained 7% compared with the industry’s 13.8% rally.
Over the past 60 days, the Zacks Consensus Estimate for NMR’s current fiscal-year earnings has been revised 43.5% upward. Shares of the company have gained 43.9% over the past six months.
Earnings estimates for TW have been revised 4.7% upward for the current year over the past 60 days. Shares of the company have gained 25% in the past six months.
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Morgan Stanley (MS) Wealth Offers Share Trading of Private Firms
Morgan Stanley’s (MS - Free Report) wealth management division is offering its customers a chance to trade the sought-after shares of private companies before they are available to the wider public. The news, reported by Bloomberg, stated that MS has taken this step because currently the startups that are considering initial public offerings are remaining private for a very long time.
Morgan Stanley’s private markets transaction desk will assist the firm’s wealth management clients who want to invest in the highly fragmented and opaque market for private shares.
By trading the shares of private companies, employees and some institutional investors are able to sell their stakes to accredited investors.
While such shares are fundamentally riskier because they are not liquid, more and more investors are being attracted toward such shares to capture the growth of companies that are ready to go public after years of remaining private.
Kevin Swan, the head of private markets solutions at Morgan Stanley Wealth Management, stated, “There’s been increasing pressure over the past number of years to get into these companies while the value creation is occurring rather than having to wait until the IPO. When investors have a need for liquidity, we want to be there to have a solution for them.”
Swan confirmed that MS does not intend to compete with platforms that already allow pre-IPO share trading to investors. Instead, Morgan Stanley will take an “open and agnostic approach” and work with external platforms as well as its different internal arms to complete trades based on each situation.
Per Michael Gaviser, the head of private markets at Morgan Stanley Wealth Management, the bid-ask spread (the difference between the highest price that a buyer is willing to pay and the lowest price that a seller is willing to accept) has narrowed as the startup market recovers following the Federal Reserve’s rate hike movement.
Gaviser said, “As that happens, you’ll see an exponential increase. What drives the market going forward? That narrowing of the bid-ask spread and people getting more comfortable with the state of the marketplace.”
Notably, Morgan Stanley’s wealth management segment contributed 48.5% of total net revenues in 2023. The segment provides brokerage and investment advisory services, financial and wealth planning services, annuity and other insurance products, credit and other lending products, cash management services, retirement services and trust and fiduciary services.
For the past few years, Morgan Stanley has been focusing more on its wealth management and investment management segments as these are less dependent on the capital markets and are less volatile revenue sources.
For this, the company made some strategic expansion efforts, including the buyouts of Eaton Vance, E*Trade Financial and Shareworks. Driven by these efforts, both the segments’ aggregate contribution to net revenues jumped to more than 57% in 2023 from 26% in 2010.
Also, the wealth management segment’s total client assets have witnessed a five-year (2018-2023) compound annual growth rate (CAGR) of 17.4%, while the investment management segment’s total assets under management have recorded a CAGR of 21.5% over the same period.
In another effort to focus more on the wealth management segment, Morgan Stanley is likely to add spot bitcoin exchange traded fund (ETFs) products to its brokerage platform.
The company has been evaluating offering spot bitcoin ETFs to clients ever since the Securities and Exchange Commission approved their introduction in January. Currently, there are ten spot bitcoin ETFs trading in the country.
Over the past six months, shares of MS have gained 7% compared with the industry’s 13.8% rally.
Image Source: Zacks Investment Research
Currently, MS carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks from the same space are Nomura Holdings, Inc. (NMR - Free Report) and Tradeweb Markets Inc. (TW - Free Report) . Currently, NMR and TW carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 60 days, the Zacks Consensus Estimate for NMR’s current fiscal-year earnings has been revised 43.5% upward. Shares of the company have gained 43.9% over the past six months.
Earnings estimates for TW have been revised 4.7% upward for the current year over the past 60 days. Shares of the company have gained 25% in the past six months.