Morgan Stanley

We are rotating toward scale within financials, which led us to trim our position in Morgan Stanley. Our focus is on the largest, most durable platforms in asset management and retail brokerage, which we believe will become more efficient as they apply AI internally. This decision reflects our preference for businesses that can leverage their scale advantages, and while Morgan Stanley remains a solid company, we see better opportunities elsewhere.

Morgan Stanley (MS) was included in our portfolio as we leaned into the Financials sector, reflecting a deliberate decision to take on leadership. The sector broke out and assumed market leadership, supported by resilient credit and solid capital markets activity. Our exposure to Morgan Stanley was part of a broader strategy to capitalize on the strength of the financial sector, which was a leading contributor to our performance this quarter.

The letter mentions that the portfolio was trimmed in Morgan Stanley as its stock price reached new highs and its size in the portfolio had become overweighted. This indicates a cautious approach to the holding without expressing a strong bullish or bearish sentiment.

In the first quarter of 2026, we added significantly to our position in Morgan Stanley, reflecting our belief in its strong long-term growth potential. The market's short-term fears have created an attractive entry point for this high-quality business. We see Morgan Stanley as a durable player in the financial sector, capable of compounding returns over time despite current geopolitical and economic challenges. Our restructuring has positioned us to capitalize on these long-term compounders, and we believe Morgan Stanley will be a key part of our portfolio's success moving forward.

The letter discusses Morgan Stanley in the context of broader market trends and investment strategies but does not provide a specific investment thesis or directional argument regarding the company's future performance.

The letter discusses Morgan Stanley's model revision from a traditional 60/40 stocks/bonds allocation to a 60/20/20 allocation that includes gold. This change reflects a broader awareness of inflation trends and the need for diversification in investment strategies. However, there is no explicit bullish or bearish stance taken on Morgan Stanley itself.

Morgan Stanley reported record Capital Markets revenue in the second quarter, driven by equity capital markets activity and equities trading volumes. Its Wealth Management division reported 14% y/y revenue growth, as fund flows grew 7% and market share was strong. Furthermore, management was able to control expenses well despite the strong revenue growth, as a 70.7% efficiency ratio was 130 bps below consensus estimates. This strong performance underscores the firm's operational resilience and ability to capitalize on market opportunities.

Morgan Stanley is facing challenges due to policy uncertainty, particularly with its exposure to equity capital markets and M&A activities. The manager notes that the company is 'most likely to be hurt by policy uncertainty' and that deal activity is 'merely delayed short-term' as participants assess the impacts of tariff and trade policies. This suggests a cautious outlook for the firm in the near term, as the broader economic environment remains uncertain.

The Matrix Dividend Income portfolio has trimmed its position in Morgan Stanley due to price strength, but they still hold a good-sized position. The manager notes that despite the recent decline in the market, Morgan Stanley has pulled back to levels that set the stage for good appreciation from here.

The Matrix Dividend Income portfolio trimmed its position in Morgan Stanley on price strength but still holds a good-sized position. The manager notes that Morgan Stanley, along with other financials, has pulled back to levels that set the stage for good appreciation from here.