Big Bank Shareholder Activism Is Here

Summary

ValueAct is dead set on shaking up Wall Street.

It failed at American Express.

But now has a brokerage house in his signs.

Morgan Stanley (NYSE:MS) now has an activist investor as a shareholder, which could help open up the floodgates when it comes to shareholder activism at Wall Street's big banks. We haven't seen activist investors take a real interest in helping break up Wall Street's too-big-to-fail banks, but as I've said before, it's only a matter of time before big bank breakups are forced to happen.

The Easy Life

For now, MS has it easy. ValueAct Capital, the San Francisco-based hedge fund, has a 2 percent stake in MS. Jeff Ubben, who founded ValueAct in 2000, has put up stellar returns and is known for working as a constructive activist investor.

ValueAct hasn't gone activist officially on MS, with just a 2 percent stake. However, this is definitely a starter position, and MS will likely look to get a board seat and build up its stake over the coming months.

Precedent

ValueAct is no stranger to big banks, having taken on American Express (NYSE:AXP) last year. ValueAct wanted to shake up management, but eventually blew out of the stock and abandoned his activist campaign after getting push back from Warren Buffett. Buffett's Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) owns a 15% stake in AXP.

Buffett and Ubben didn't see eye to eye, as Buffett's rebuttal to activist change was...