In Financial Crisis, Hedgies Betting Morgan Stanley 'First to Go'

If another financial crisis were to strike, like the one in 2008,Morgan Stanley [MS  17.66    -0.19  (-1.06%) ] will be the first to go --that's the conventional wisdom on Wall Street. So says, Charlie Bobrinskoy, vice-chairman of Ariel Investments in an interview on CNBC's Fast Money.
“That’s why whenever there’s trouble in Europe, Morgan seems to fall the most,” he says.
Hedge fund manager Anthony Scaramucci confirms the thesis; Scaramucci says it's the prevailing reason why so many hedgies have either shorted Morgan Stanley outright or paired it with a long position in Goldman Sachs [GS  115.33   -1.53  (-1.31%)  
“There is a theory that you always pick the next weakest link to go,” says Bobrinskoy as he echoes Scaramucci. "First Bear Stearns was weakest then Lehman Brothers was weakest. Now, the conventional wisdom is that if something bad happens the weakest sister would be Morgan Stanley.”

But that doesn’t mean Bobrinksoy advocates a short position. In fact he thinks shorting Morgan is probably misguided. 

Bobrinksoy describes Morgan Stanley as a stock that people love to hate. “People are worried about a Moody’s downgrade – but the stock is extremely cheap – historically investment banks trade between one and two times book – right now Morgan Stanley trades for $16 and tangible book is $28.” He also says current skepticism in Morgan Stanley is based on an old paradigm. “They’re not nearly as levered as Bear and Lehman were – they do not have the same kinds of mortgage exposures that Bear and Lehman had.”

Also he says current weakness is simply profit taking - and reminds the desk that Morgan Stanley was trading at $10 in October. All told, he thinks all the bearish sentiment presents opportunity. “In Morgan Stanley, we think there’s plenty of room to run.”
Source-:http://www.cnbc.com/id/47092690