Will Citigroup Deal Talk Scare Morgan Stanley’s Major Institutional Investors?

Morgan Stanley’s (NYSE:MS) stock is returning over 39% to shareholders so far in the first quarter of 2012. Recently, Reuters revealed Morgan Stanley could possibly buy all of Citigroup’s (NYSE:C) stake this year in their wealth management joint venture. Meanwhile, Morgan Stanley is currently paying a 1% dividend to its shareholders. Given the first quarter surge in the banking giant’s shares, are its largest institutional investors trimming positions or adding in the wake of a recovering U.S. banking system?

492 institutional firms indicated owning shares of Morgan Stanley (NYSE:MS) in both Q3 2011and Q4 2011. These firms reported owning a total of 1.421 billion shares on 09/30/2011 and 1.395 billion shares on 12/31/2011. The shares closed at $13.43 on 09/30/2011 and $15.09 on 12/31/2011, for an aggregate market value of $19.086 billion and $21.052 billion, respectively.

Here are the ten largest positions in Morgan Stanley at the end of December 31st, 2011.

MITSUBISHI UFJ FINANCIAL GROUP INC held 432,017,152 shares on 09/30/2011 which were worth $5,801,990,351. On 12/31/2011 the firm held 432,017,152 shares worth $6,519,138,824. This represented a reduction of 0 shares or $717,148,472.

STATE STREET CORP held 167,542,478 shares on 09/30/2011 which were worth $2,250,095,480. On 12/31/2011 the firm held 165,720,173 shares worth $2,500,717,411. This represented a reduction of 1,822,305 shares or $250,621,931.

FMR LLC held 74,443,765 shares on 09/30/2011 which were worth $999,779,764. On 12/31/2011 the firm held 69,988,041 shares worth $1,056,119,539. This represented a reduction of 4,455,724 shares or $56,339,775.

VANGUARD GROUP INC held 54,272,675 shares on 09/30/2011 which were worth $728,882,025. On 12/31/2011 the firm held 56,273,271 shares worth $849,163,659. This represented an increase of 2,000,596 shares or $120,281,634.

FRANKLIN RESOURCES INC held 48,486,062 shares on 09/30/2011 which were worth $651,167,813. On 12/31/2011 the firm held 49,439,648 shares worth $746,044,288. This represented an increase of 953,586 shares or $94,876,476.

BLACKROCK INSTITUTIONAL TRUST COMPANY N.A. held 37,141,752 shares on 09/30/2011 which were worth $498,813,729. On 12/31/2011 the firm held 38,620,374 shares worth $582,781,444. This represented an increase of 1,478,622 shares or $83,967,714.

PRICE T ROWE ASSOCIATES INC /MD/ held 29,520,846 shares on 09/30/2011 which were worth $396,464,962. On 12/31/2011 the firm held 31,052,841 shares worth $468,587,371. This represented an increase of 1,531,995 shares or $72,122,409.

CAPITAL WORLD INVESTORS held 25,500,000 shares on 09/30/2011 which were worth $342,465,000. On 12/31/2011 the firm held 25,500,000 shares worth $384,795,000. This represented a reduction of 0 shares or $42,330,000.

JANUS CAPITAL MANAGEMENT LLC held 32,880,589 shares on 09/30/2011 which were worth $441,586,310. On 12/31/2011 the firm held 20,819,125 shares worth $314,160,596. This represented a reduction of 12,061,464 shares or $127,425,714.

ALLIANCEBERNSTEIN L.P. held 3,924,941 shares on 09/30/2011 which were worth $52,711,958. On 12/31/2011 the firm held 18,969,858 shares worth $286,255,157. This represented an increase of 15,044,917 shares or $233,543,200.

About the company: Morgan Stanley, a bank holding company, provides diversified financial services on a worldwide basis. The Company operates a global securities business which serves individual and institutional investors and investment banking clients. Morgan Stanley also operates a global asset management business.

To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com