Morgan Stanley & Co International plc, a long-time shareholder of Media Prima Bhd, has been trimming its stake in the loss-making media company, causing an overhang.

What’s surprising is that the investment bank, which is holding the shares on behalf of an undisclosed firm, has been doing so at a loss since April.

According to CGS-CIMB, Morgan Stanley’s average cost of Media Prima shares since it emerged as a substantial shareholder in April 2017 was 77.6 sen. Media Prima shares are now hovering at 45 sen.

The company’s shareholding list had been shrouded in obscurity until July 2019. Prior to that, although Morgan Stanley was the single largest shareholder with 12.77%, it was Umno that controlled Media Prima through Gabungan Kesturi Sdn Bhd and Altima Inc.

Both entities held a total of 19.9% in Media Prima but the Umno-linked companies controlled it with the tacit support of institutional funds such as the Employees Provident Fund (EPF) and Permodalan Nasional Bhd.

Tan Sri Syed Mokhtar Albukhary’s Aurora Mulia Sdn Bhd then emerged as a substantial shareholder in Media Prima with a 31.9% stake in October 2019, taking over the interests of both Gabungan Kesturi and Altima.

The speculation then was that Morgan Stanley was holding the 12.77% stake for Syed Mokhtar. However, in March 2020, Syed Mokhtar declared that his interest in Media Prima was only held through Aurora Mulia.

Morgan Stanley is the third largest shareholder with an 11.74% stake and the identity of the ultimate beneficiary of the shares is still subject to speculation.

It should not come as a surprise that Morgan Stanley is trimming its stake because Media Prima has been bleeding since 2016, has not declared dividends in the last five years, and is operating in a highly competitive environment.

The question is why did Morgan Stanley, or its client specifically, even start amassing a stake in Media Prima from 2017?