S&P Global looks very bullish after TCI's Chris Hohn expressed strong confidence in growth at the ratings agencies. Per the call notes, investment-grade ratings are supported by the AI buildout, sub-investment-grade by huge maturity walls, and Hohn believes the market is wrong to reprice these businesses lower as yields rise. x.com 

S&P Global's ratings and indices could form an exceptionally profitable, wide-moat standalone business. Without its other units, their implied operating margin would be around 68%, among the market's top five; that makes further spinoffs sensible, though the separation is hypothetical. x.com  x.com 

S&P Global's moat may be weaker than its ratings pricing power suggests, and its gross profit dollars are likely to come under pressure as AI does more of the work, even if margins rise. FICO and the credit bureaus once looked just as required and oligopolistic until Vantage, with regulatory help, built a better product and upended pricing. The market is skeptical of historical data resale, as with CoStar and Verisk; the index business looks durable. x.com 

S&P Global and Moody's collect a toll on AI capex either way: if data-center returns are bond-like, the buildout gets funded with bonds, each needing a rating at issue and surveillance while outstanding. Low returns plus heavy capex keep the issuance calendar full while equity holders eat thin returns. New issuance may stay quiet given a 2028-weighted refinancing wall and wider spreads, but surveillance and index revenue bill off outstanding debt. Both traded well under 25x in past droughts. … Show more

S&P Global collects a toll on new bonds and money flowing into index funds. It is a five-year buy at today's valuation despite a roughly 16% year-to-date share decline amid AI fears: last quarter ratings revenue grew 17%, index revenue 20%, and EPS 23%. Free cash flow per share has compounded 14.5% annually since late 2016. x.com 

Moody's and S&P Global could de-rate from high starting multiples if generalist portfolio managers come to see them as FICO 2.0. Their industry structures differ, but parallels in standards, pricing power and regulatory exposure could build a narrative that their pricing power is tapped out after the FICO case study, compressing multiples further. So far their de-rating has come from macro and AI pressure, not such fears. x.com  x.com  x.com 

Moody's is one of the world's most beautiful businesses because trusted ratings take decades to establish, protecting its duopoly with S&P and its pricing power. Operating margins exceed 45%, and Moody's Analytics subscriptions make revenue quite resilient when companies issue less debt. Decades of credit-risk data are a huge AI product opportunity; fast-growing private credit also needs ratings. x.com 

S&P Global looks like a strong, fairly low-risk stock likely to beat the market from here, as it trades at 20x forward earnings, among its lowest levels in a decade, despite one of the world's strongest moats. With Moody's it forms one of the best duopolies anywhere, yet it has been lumped into the SaaS selloff. x.com 

The market is wrong to reprice Moody's and S&P Global just because yields are rising. Per @moats_multiples' notes from a TCI call, Chris Hohn is very confident about ratings-agency growth, with investment-grade ratings supported by the AI buildout and sub-investment-grade by huge maturity walls. TCI's large positions in both fit that view. x.com 

S&P Global and Moody's have intellectual-property moats the market underappreciates in its AI disruption fears. Those fears assume that if AI can technically replicate a product, the business can be disrupted, but that presumes the necessary inputs are freely available, which often isn't the case. Ratings are also deeply embedded in industry workflows and institutional mandates, so switching is a procurement decision, not just a technical one. x.com