Was Morgan Manipulated?

Discussion in 'Stocks' started by patchie, Oct 13, 2008.

  1. patchie


    For the past week Morgan Stanley’s stock was besieged with selling pressures as rumors circulated about Mitsubishi backing out of their deal. Both companies denied the rumors circulating and yet the stock tumbled and tumbled hard losing 50% of its value in that week. Today the deal is struck, after some sweetened negotiations due to – the collapse in market price – and the MS market gaps open 50%. At these prices the ratio of price to buy-in is not dissimilar to what it was prior to the raid.

    Question: If MS had to offer more to get the funds it was going to get previously, why is the stock now worth 50% more than it was just last Friday? Last week and this week Morgan was going to get the same $9 Billion.

    I am curious as to what people think of those rumors that sent the stock reeling. Rumors that were being denied every day and rumors that have now proven to be bogus.
  2. mind


    well, maybe there were some other things happening at
    the same time ... last week was not only about that deal,
    if i recall correctly ...
  3. patchie


    I beg to differ. Last week was dominated by rumors that Mitsubishi was going to bail out on this deal. The rumors started on Monday and continued throughout the week. Both Morgan and Mitsubishi had to repeatedly put down the rumors.

    Morgan gapped up 50% and is now up 61% while Goldman is looking at a 13% rise on the government news. You don't think this deal was a major contributor in both the decline and the rise?

    Morgan became a target on September 15.


    Also note the level of shorts in MS remained on par with the short sale activities pre-short sale ban.
  4. 9B injected by Mitsu was approximately 90% of the value of MS on Friday. federal regulations impact mitsu when they own > 25% of a US Bank. don't believe it is disallowed... only all other buisinesses and transactions are subject to additional regulations.

    Deal looked like it fell apart yesterday afternoon... The feds are doing something here... anything and everything they can to prevent more failures. Define manipulation versus rescue? seems to me to be one and the same.
  5. patchie


    Dated Tuesday October 9

    The bank's shares were being punished by a rumor that Mitsubishi UFJ Finanical Group Inc. (MTU) would pull out of its deal to invest in Morgan Stanley. After its stock fell, Morgan Stanley issued a statement saying it had received the necessary regulatory approvals, and the "transaction is expected to close imminently upon expiration of the Federal Reserve five-day post-approval waiting period."

    Shares of Morgan Stanley recently were down 20% to $18.83, wiping about $5.3 billion off its market value. Earlier, shares of Morgan Stanley traded as low as $14.13, within $2.50 of the low during the Wall Street crisis, set on Sept. 18, the session when the first report of a broad government bailout plan surfaced.

    Now by my calculations, down 20% to $18.00/share had Mitsubishi in a better deal than what was just signed off. It looks like this Dow report had the stock being punished based on these false rumors that continued throughout the week.
  6. mind


    i would not follow a conspiracy route. take the loss and
    move on. whining wastes energy. this was the worst
    week in a century. weird things happen in such times.
    don't waste your time trying to understand them, aside
    of what improves your future trading.