Gorman shows off sensible tortoise strategy

April 21, 2010

James Gorman failed to deliver blowout earnings in his first quarter running Morgan Stanley. Trading and investment banking revenue, for example, was largely below rivals. But neither the new Morgan Stanley chief nor shareholders should be grumbling at the $1.8 billion earned by the Wall Street firm in the first three months of the year.

The bottom line includes a $382 million tax benefit from keeping earlier undistributed non-U.S. earnings abroad for reinvestment. But even without this, Morgan Stanley still posted a 13.1 percent return on equity. That’s not as juicy as Goldman’s 20.1 percent ROE, or the 25 percent JPMorgan’s  investment bank reported. But after a year of either losses or lowly returns, it’s still a welcome improvement.

What’s more, all three of Morgan Stanley’s major business units performed better. Asset management reported its first pre-tax profit since the last quarter of 2007, thanks to gains instead of losses from its real estate-heavy investment portfolio and a decision to sell its retail money-management business. Meanwhile, despite a slight drop in revenue in global wealth management, the pre-tax margin jumped more than a quarter since December, to 9 percent.

And Morgan Stanley’s trading desks picked up, too. They were helped by not having to record any accounting losses on the firm’s own liabilities, which last year lopped off $5.5 billion of revenue. Even excluding that reversal of fortune, debt trading more than doubled to $2.7 billion, while equities trading improved by 55 percent to $1.4 billion.

Fixed income still far underperformed rivals. Bank of America, Citi and JPMorgan each raked in at least double Morgan Stanley’s tally. And Gorman’s shop only made 37 percent of Goldman’s take — the same lag as last year.

That’s probably the clearest indication Morgan Stanley is still in post-crisis catch-up mode. These results don’t show much evidence the 400 recently hired traders have yet helped to boost the pace. But that’s a comfort, too. Had trading results taken off like a mad March hare, it would have been a red flag suggesting an unhealthy appetite for risk. Instead, Gorman seems to be sticking to the tortoise strategy. The steady progress it’s producing is far more welcome.

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April 22, 2010

Metalmark now CITIBANK
Bank of America

We have been shareholders, patient ones, with family members of AVENTINE RENEWABLE ENERGY since early 2007. In January of this year, we, Bill and Sheila Toomey, sat in attendance during a Bankruptcy, in Wilmington, DE, hearing, where our objections were entered into the dockets record. We are not lawyers and our attendance was with sincere respect to the court, for entering our objections. We learned, quite quickly, the procedural format of lawyers takes precedence over the actual evaluation of data impacting this entire Bankruptcy, in progress.

With the manner of how this has developed, we have the following concerns and are frustrated with the procedural process inability to resolve these concerns. We are and have been shareholders, yet, our rights, as shareholders to VOTE on the initial bankruptcy filing, the selection of the ever changing senior management and the Board of Directors have ignored and excluded our input, as members of majority shareholders . We have been consistently superseded by a creditor group who had directed the activities of the senior management and Board of Directors prior to the Bankruptcy filing, and continue to do so, as indicated by previously employed senior managers. We, the shareholders, have not been considered, informed or included in the decision making process for over two years, well before the Bankruptcy filing. From our perspective, we had been passively patient not even considering how our management and Board of Directors were taking direction from the company financial advisor, and creditor, while excluding shareholders. It is this obvious CONFLICT(s) of Interest(s) which causes us to implore your support for the overdue formation of a Shareholders Committee.

Further, we would request an understanding, with explanation, why a creditor group and financial advisor selected and voted successfully a POR, Plan of Recovery, which was overwhelmingly rejected, by over 70% of the actual shareholder owners. Those who won the vote for the exclusive POR, submitted, were nothing more than bondholders who could, and can, be paid, as promised through the cash flow of the business. Of course, they would like to take ownership of the company for serviceable debt, but why should a creditor and financial advisor be placed into a position to take the company from the shareholder owners, without the shareholders choice to pay the debt, as promised ?

Finally, we the shareholders, having been excluded and ignored throughout this procedural process, we find completely unnecessary, humbly request, your support of the shareholders right to call an immediate shareholders meeting, in April 2010, to deliberate in these details for the benefit, inclusion and future success of employees, shareholders, partners and customers of Aventine Renewable Energy. We may not be lawyers, but we know what paying debt and managing a business requires. Given the opportunity, we will ensure the bills are paid and business responsibilities are conducted as the principles of business ethics expect. We believe the actual bankruptcy filing should be rejected, dismissed, because the rationale and premise, for filing, have been proven to not satisfy or meet the need for Bankruptcy protection.

Your consideration and approval of these requests are in line with the respect shareholders deserve for their investment in this company and in how shareholder rights are understood by the majority of existing, shareholder owners.

Thank you for your time and sincere consideration of our humble requests.

May God guide and Bless you.


William J Toomey and Sheila M Toomey

Shareholders Aventine Renewable Energy

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