Invest Like a Pro: Morgan Stanley Asset Management

Imitation is the best form of flattery, right? Well, when you're learning a new skill, imitation can also be a great way to hone your craft.

If you're learning guitar, you might pick up a book of Jimi Hendrix's licks or download the chords to a couple of Bob Dylan's songs. So when you're trying to become a better investor it only makes sense to take a peek at what the professional investors are up to.

For the Fools who don't have the time or inclination to pick individual stocks on their own, Shannon Zimmerman at The Fool's Champion Funds newsletter has put together a buffet of mutual funds that have collectively outperformed their benchmarks by more than 13%. For the rest of us, we can tune in directly to what some of the major funds are holding.

You see, the SEC requires institutional investment managers who manage $100 million or more to show their cards via quarterly 13F filings. This week I've dug in to pull up some of the moves that investment bank Morgan Stanley (NYSE:MS) has been making and, to make things more interesting, I cross referenced its stocks against the opinions of The Fool's CAPS community.

Here are three stocks Morgan Stanley bought more of between its March filing and June filing ...

... and three the firm lightened its position on.

Now before you make any hasty moves, remember that we're looking at what Morgan Stanley has done in retrospect. For all we know, since the last 13F filing the firm has drastically changed its holdings in any or all of the above stocks. With that in mind, here are some thoughts on TD AMERITRADE to kick off further research.

E*AmeriSchwab after all?
Unfortunately, I can't take credit for that clever name -- an amalgam of E*Trade, TD AMERITRADE, and Charles Schwab. That's the brainchild of fellow Fool Rick Munarriz. He thought he was having some fun when he came up with the name, but it looks like two of these three, E*Trade and TD AMERITRADE, could be looking seriously at becoming one.

The idea of further consolidation in the online broker industry has been given fuel over the past couple of months as online brokers have gotten a lot cheaper. TD AMERITRADE, the presumed acquirer with a $10.6 billion market value, likely couldn't help but notice that the price tag to combine with E*Trade has plummeted from more than $10 billion to $6.4 billion since the beginning of June. E*Trade's drop has been due to its exposure to mortgage loans, although it has adamantly assured its customers (of which I am one) there is nothing to worry about.

Although Morgan Stanley made its big move into TD AMERITRADE stock before the public disclosure of talks between TD AMERITRADE and E*Trade, the size of the move suggests that they saw serious value in TD AMERITRADE. After TD Bank, which owns 40.4% of TD AMERITRADE, and TD AMERITRADE's founding family, the Ricketts, who own somewhere in the 15%-20% range, Morgan Stanley was the top TD AMERITRADE shareholder at the end of June.

On CAPS, the stock has a respectable, if not top-notch, four-star rating from 381 outperform ratings out of 421 total ratings. CAPS All-Star cdhampel recently picked the stock to outperform, claiming that "everyone hit the panic button" and the stock is destined to get back to $20 per share. 8martini8 is likewise bullish on the stock and claimed -- back in March mind you -- that "not all online brokerage services are going to be here in 5 years" and TD AMERITRADE's "rock-solid presence, if not a moat" would be a considerable help in keeping the company in a leading position.

Eager to read more commentary from the CAPS community on these Morgan Stanley-owned stocks? Hop on over to CAPS and start interacting with the other 60,000-plus CAPS players. And as you check out these stocks, you can also learn about more than 4,900 other stocks that are currently rated on CAPS.

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