Morgan Stanley's recently filed Form 13F with the U.S. Securities and Exchange Commission (SEC), detailing its portfolio as of December 31, reveals the firm's investment strategy for the fourth quarter. The overall changes highlight a focus on maintaining core technology holdings, reducing index-tracking exposure, and enhancing active stock selection.
The total value of Morgan Stanley's portfolio reached $1.67 trillion in Q4, a 1.2% increase from the previous quarter's $1.65 trillion. The firm added 454 new stocks to its portfolio, increased its positions in 4,007 stocks, reduced holdings in 3,028 stocks, and sold out of 415 stocks entirely. The top ten holdings accounted for 22.15% of the total portfolio value.
Technology giants continued to dominate the top holdings. Apple (AAPL.US) rose to the top position, with Morgan Stanley increasing its stake by approximately 1.38 million shares. NVIDIA (NVDA.US) held steady in second place, receiving an addition of nearly 780,000 shares. Microsoft (MSFT.US) moved down from first to third place, though its position was still increased by about 980,000 shares. Alphabet's Class A shares (GOOGL.US) ranked fourth, with a reduction of around 150,000 shares, leaving Morgan Stanley with about 122 million shares. Conversely, the firm increased its holding in Alphabet's Class C shares (GOOG.US) by 1.13 million shares, bringing the total to approximately 71.84 million shares, indicating an optimization of share class exposure while maintaining overall stability. Amazon (AMZN.US) occupied the fifth spot, with its position reduced by about 1.28 million shares.
Among other technology stocks, Meta Platforms (META.US) saw an increase of roughly 820,000 shares, while Tesla (TSLA.US) was reduced by 360,000 shares. Advanced Micro Devices (AMD.US) saw a significant decrease of 5.02 million shares, Palantir (PLTR.US) was cut by 1.03 million shares, and Broadcom (AVGO.US) was trimmed by nearly 44,000 shares. Overall, Morgan Stanley did not significantly lower its allocation to the technology sector but instead rebalanced within it, showing a preference for industry leaders with stronger earnings visibility and cash flow stability.
In terms of reductions, Morgan Stanley also decreased its positions in healthcare stocks such as Johnson & Johnson (JNJ.US), AbbVie (ABBV.US), and Thermo Fisher Scientific (TMO.US). It also trimmed holdings in consumer staples like Walmart (WMT.US), Procter & Gamble (PG.US), and Coca-Cola (KO.US), as well as energy stocks including Exxon Mobil (XOM.US) and Chevron (CVX.US). This may reflect a marginal decline in the attractiveness of some defensive and high-dividend sectors as the interest rate path becomes clearer.
Regarding additions, Morgan Stanley increased its stakes in JPMorgan Chase (JPM.US), Uber (UBER.US), and the SPDR Gold Shares ETF (GLD.US), among others.
New positions established in the quarter included purchases of Medline (MDLN.US), TotalEnergies (TTE.US), Qnity Electronics (Q.US), Solstice (SOLS.US), and MICC. Notably, JPMorgan Chase and Goldman Sachs also initiated positions in TotalEnergies during Q4, while BlackRock established new positions in Qnity Electronics and Solstice.
Based on the proportion of portfolio changes, the top five buys were: Alphabet Class C shares, Eli Lilly (LLY.US), Apple, Micron Technology (MU.US), and the Vanguard FTSE Developed Markets ETF (VEA.US). The top five sells included: the SPDR S&P 500 ETF Trust (SPY.US), the Invesco QQQ Trust (QQQ.US), Home Depot (HD.US), ServiceNow (NOW.US), and MercadoLibre (MELI.US). The decline in ETF holdings suggests Morgan Stanley leaned towards seeking alpha through individual stock selection in the quarter, rather than relying on broad market index exposure.