Morgan Stanley expects the benefits of its recent acquisitions will take time and that margins in its asset management division will be slim for several more quarters, The Wall Street Journal reports. And if the firm sticks to its intention of making additional acquisitions, those could continue to lower earnings.
The firm made the revelation during a New York conference, with Chief Financial Officer David Sidwell saying, “We expect to see continued pressure on margins into next year.”
For the first nine months of this year, the pre-tax profit margin on revenue in Morgan’s asset management unit was 25%, compared to 37% in its investment banking and trading units. Owen Thomas, head of the asset management division, said it will take three to five years of achieving the firm’s goal of 30% to 35% profit margins.
Last month, the firm entered into an agreement to buy hedge fund FrontPoint Partners for $300 million, and it paid another $300 million for a 19% stake in hedge fund Lansdowne Partners and took another stake, believed to be $200 million, in Avenue Capital Group.The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.