By The Way, Dan Loeb Is Also Long Morgan Stanley

(And they should, because it means war with Pershing Square's, Bill Ackman).

But in all our excitement over a good knock-down, drag-out hedge fund fight we shouldn't forget that Loeb's Third Point had a solid year (up 21.2%) thanks to its long positions in Greek government bonds, AIG, Yahoo, Murphy Oil Corp, and Delphi Corp.

And it should also be noted that Loeb has picked up a long position in another one of today's news makers, Morgan Stanley. Earlier the bank announced that it would be cutting 1600 jobs, and the market liked it.

Here's why Loeb likes Morgan:

During the Fourth Quarter, we initiated a position in Morgan Stanley (MS), which we believe is in the early innings of a turnaround. The bank’s investment banking advisory and equity sales and trading businesses – which we know well from our perspectives as both investors and long-time satisfied clients – have consistently won top three market shares and are impressively positioned. Although MS has historically failed to capitalize on its strengths, its leadership currently is focused on growing its good businesses while consolidating and successfully fixing its previously troubled Wealth Management business. In 2013, we expect Morgan Stanley to tackle its other weak business, Fixed Income, Currency, and Commodities (FICC) sales and trading. Morgan Stanley's stock currently trades at a 20% discount to tangible book (down from a 35% discount when we acquired our stake at an average cost of $16.77 per share), and we view MS at these prices as a chance to buy a free call option on a promising restructuring.

Loeb also tipped his hat to the bank's CEO James Gorman and said that he think has Morgan Stanley's management has the stuff to deal with the the company's problem areas.

Plus, overall, the he thinks world's macro picture will improve, which is great for deals.

We'll find out if that optimism shows up in Morgan's earnings next week.