MS Morgan Stanley

By David Benoit 

ValueAct Capital Management LP has built a stake of about 2% stake in Morgan Stanley, though the typical activist investor believes the investment bank is already on the right track, according to a filing Monday and people familiar with the matter.

The hedge fund told its own investors in a quarterly letter that the market is misunderstanding the New York bank, keeping the stock price low based on the bank's exposure to stock and bond trading businesses.

But ValueAct believes that misplaces the focus on the bank, which is now largely on giving advice to corporations and its massive wealth-management business, operations that generate fees with less risk, according to the letter, reviewed by The Wall Street Journal.

The investor, who has successfully lobbied for change at companies like Microsoft Corp. and last year took a stake and then sold out of American Express Co., isn't planning to call for any major changes at the bank and backs the chairman and chief executive, James Gorman, people familiar with the matter said.

"As with any investor, we welcome ValueAct as a shareholder," a Morgan Stanely spokesman said in a statement.

Write to David Benoit at david.benoit@wsj.com

(END) Dow Jones Newswires

August 15, 2016 18:22 ET (22:22 GMT)

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