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Morgan Stanley

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-$20.65 -20.74%
The Spinoffs of Sears
While the original company is long gone Sears had some pretty impressive spinoffs during its time as a public company. Several are still public Allstate $ALL, Morgan Stanley $MS, Lands End $LE, and Discover $DFS.

Another important company that came out of Sears was Roper $ROP, while not spun off Roper reinvented its business under Sears.

Such a crazy graphic.
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Whoa, I had no idea that $DFS was once a Sears subsidiary. There's some great nostalgia happening on the left side of this graphic :)
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Tom's avatar
$16.4m follower assets
Fantasy M&A: What merger or acquisition would you execute if you could?
Given that M&A has seemed to dominate most of the private market activity in 2022, I thought I'd posit this question to the broader Commonstock Universe:

If you could orchestrate a merger between two companies, or the acquisition of one company from another, assuming there are no legal, regulatory, or anti-trust constraints - who would you choose and why?

Personally, I'd like to see $HOOD be acquired by another broker or integrated financial services firm, perhaps someone like $PYPL or $SQ. While the retail trading frenzy has simmered from Q1 '21, I see Robinhood's UI/UX as superior to other trading platforms and a complementary offering found in competing fintechs like $SOFI & $MS (Morgan Stanley/Ameritrade overlap). On the other hand, I can see brokers today acquihiring Robinhood's engineers, or even using Robinhood as a go-to market vector for younger demographics, should they purchase the company. I have no stake in Robinhood today, nor am I a user anymore. However, I, and so many people I know, have begun their investing journey on Robinhood thanks to their ease of onboarding and use.

What do you think? $MNA $ARB
Sunday's Coffee - The upcoming week 18/7 - 22/7
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  • Last week, U.S. June Inflation soared to 9.1%, a New 41-Year High. As a result, the US10Y-US2Y spread turned negative for the third time this year and went as low as -0.22, the lowest since 2000 which is a sign of recession.
  • Banks reported mixed earnings. Of the four major banks to report second-quarter results last week, only Citigroup topped expectations for revenue. The banks cited "challenging macro and geopolitical environment" for pausing buyback. ($C,$JPM,$MS)
  • $TSM reported another quarter of record profits, booming sales, and high margins, which caused the Semiconductor sector to rally with the hope the chips booming is not over. The rally may put some bulls in euphoria, but we have to remember that TSMC is based on a big backlog of orders that the chip makers made in advance. Chip makers such as Intel ($INTC) and Micron Technologies ($MU) lowered the guidance for Q2 Earning due to customers working through stockpiled inventory instead of placing new orders. I still believe the sector has yet to see the bottom.
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  • In the upcoming week, the market will focus on Goldman Sachs earnings on Monday, Netflix earnings and Numbers on housing starts and building permits on Tuesday (one of the Fed's key metrics), Tesla on Wednesday, and $SNAP on Thursday. Snap's earnings will serve as a guidance for the social media market stocks (Meta, Twitter, and Pinterest).
  • We may see a big move in the Indices this upcoming week if we have bad guidance from the companies above. If not, I expect the market to keep consolidating between the price levels since June, before making a big move during FOMC week.
  • $SPX and $NDX are still ranging between the price levels since June. $SPX 3750 to 3900, and $NDX 11368 to 12182. $VIX closed at 24.23, which for me it is a red flag. why? because it means it has more upside and will cause the market to sell off. I have 3 scenarios: first one, at the beginning of the week, the $VIX will drop to around 23 and the market will test the downtrend line of March ($SPX is 3890-3900 and $NDX is 12100-12182), then with the VIX Exp on Wednesday, we may see a spike in $VIX and a big selloff in the markets ahead of earnings on Wednesday and Thursday ($SPX back to 3700-3750 and $NDX to 11368-11500). The second scenario: the market will chop on the same levels as Friday ($NDX 11800-11996 and $SPX 3800-3860) and $VIX will stay on 24 before spike up. The third is a bullish scenario with good earnings $SPX testing 4000 and $NDX testing 12182-12200 levels. It is important to follow the levels and earnings and adjust our plans and trades accordingly.
  • $AAPL had an amazing month with a yield of 17%. The last time we had such a yield was in March, and later we were witnesses to a 20%-25% decline. the last Doji candle may also hint at this.
  • Goldman Sachs will report on Monday before the market open. Currently, $GS is in a downtrend. Good earnings will result in going higher to 300-303. bad earnings will result in heading lower to 278-290.
  • $TSLA will report on Wednesday, that 728-730 and 756.85 levels are big resistances for tesla. If tesla will surprise us, we may see these levels again. But I wouldn't bet on tesla this time as they had a challenging quarter with Shanghai's factory shut down. I would look for 707.86, 687.65, and 660 as strong support. (If someone wants to short Tesla, there is a new ETF - $TSLQ for that).

Wishing you all a great week!
Cheers,

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$AMZN shipping losses on prime members and Subscriptions margins (-200%+?)
I could be off here - just doing some extrapolating from the $MS fuel note and what we know about Amazon user numbers (based off online estimates). If you recognize a flaw in my logic please point it out to me, working on a model and would love to have it work!

Estimated 300m people purchased products on Amazon in 2021.

Estimated 200m prime members

Prime members purchase 2X what non-prime members purchase (widely observed estimate)

Package volume in 2021 was 18,703 (in million, so 18.7 billion)

We therefore have the following equation (P = # of packages purchased; 200 = number of prime members; 100 = # of non-prime members):

200P + 100 X .5P = 18,703
250P = 18,703
P = 74.8 - so this is the number of packages prime members purchase and the number we're interested in.

200m X 74.8 = 14,960 (14.96B)

MS estimated (see image) that shipping cost per fulfilled unit are currently around $4.18

That would indicate that Amazon is footing the bill for $4.18 X 14,960 = $62,532.8 to cover prime member shipping. If you look at a per user basis, 74.8 packages X $4.18 = $312 in shipping costs on average per prime member, while prime costs only $139.

Making some other assumptions about the Subscriptions business.

#1 Content costs = 30% of revenue (lower than NFLX but ballpark prob where NFLX headed)
#2 SG&A costs = 15% of revenue (NFLX & GOOG average past 5 years)
#3 Shipping costs = 175% of revenue ($62,532.8/$35,262 estimate for 22)

Costs = 220% of Revenue for Subscription business.
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Fortune Magazine August 2000
In an article titled “10 Stocks to Last the Decade”, they mentioned Broadcom, Charles Schwab, Enron, Genentech, Morgan Stanley, Nokia, Norte Networks, Oracle, Univision, and Viacom. Described as a buy and forget portfolio.

I’d love to see a backtest for an even $1,000 into each stock. Maybe $AVGO , $ORCL , $SCHW , $MS , and $VIAC made up for the losers🤷‍♂️

I ignore the financial noise. Will read headlines and stock lists but do not put much effort or faith on what they say. Just use it as a source of new stocks to analyze if anything.
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