QS Research · Michael Burry's Scion Capital analyst template · 2006
MORGAN STANLEY (MS)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -38% · downside -57% · upside +0%
Section 13's flat TTM base is the wrong base for a CYCLICAL bank: the six-year FY2020-FY2025 average net income to common is $12.20B (S2), only 61% of the $19.85B TTM (N15). At the company's own P/E (TTM) of 14.3x (N24), that normalized base is $12.20B x 14.3 = $174.5B / 1.563B shares = $111.6/share, -38.5% from $181.44 (N1,N5); the FY2023 trough $8.53B at 14.3x is $78.0/share, -57.0%, and only TTM earnings held at 14.3x reach $181.6/share, about flat. The market is capitalizing above-cycle earnings as permanent while insider open-market sales (54 sales, $115.8M, zero buys; S94/S96) and Q3 2026 credit provisions (S25/S97) are non-valuation catalysts. I therefore short, with the upside case essentially today's price.
Key numbers
- Share price: $181.44
- Market cap: $283.60B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $80.16B
- P/E (TTM): 14.3x
- Price / book: 2.42x
The 15 boxes
- ○ 1. Long-form business notes
Morgan Stanley's six-year XBRL record shows a clear cyclical arc: revenue peaked at $59.76B in FY2021, fell $6.09B to $53.67B in FY2022, ground sideways in FY2023 ($54.14B) and then expanded to $61.76B (FY2024) and $70.64B (FY2025), with pre-tax income tracing the same shape from $19.67B (FY2021) down to $11.81B (FY2023) and back up to $21.95B (FY2025). Net income to common followed, from $14.57B (FY2021) to $8.53B (FY2023) and $16.25B (FY2025). The balance sheet grew modestly — total equity $101.78B (FY2020) to $111.63B (FY2025) — while diluted shares fell from 1,814.0M to 1,592.0M. Operating cash flow is unusable as a cyclical normalization base, flipping sign in five of six years.
- ✓ 2. Competitive advantage
The sources do not establish a durable competitive advantage: the December 2025 Form 10-K describes intense competition and pricing pressure from banks, broker-dealers, asset managers, digital platforms and fintechs. The six fiscal years of XBRL facts show cyclical revenue and earnings, not a stable margin: revenue fell from $59.76B in FY2021 to $53.67B in FY2022 and was $70.64B in FY2025, while net income to common ranged from $8.53B in FY2023 to $16.25B in FY2025. Scale and capital are visible ($70.64B revenue and $111.63B total equity in FY2025), but no source attributes that to a moat.
- ✓ 3. 10-Q takeaways
Q3 2026 was strong on the top line: net revenues $20.3 billion, +12%, diluted EPS $3.03, +8%, and ROTCE 22.6%, with Wealth Management at record revenues and $232 billion of net new assets. The quality mix is mixed: just over half of Wealth NNA was IPO-related, Investment Management revenue fell 12% on a carried-interest reversal, and the credit provision rose to $148 million from $0 a year ago. Capital remains solid at 14.9% standardized CET1, and the Firm bought back $1.5 billion of stock; neither the 10-Q nor the earnings release gives numeric revenue or EPS guidance.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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