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 

Moody's, S&P Global and Deutsche Börse are moated toll booths that compound intrinsic value for decades, and their subsector just took market leadership. Chris Hohn, who owns all three, says Deutsche Börse's Eurex became winner-takes-all because liquidity attracts the best prices, and that ratings are essential since debt must eventually be refinanced and rated. These asset-light, scalable businesses turn revenue into profit with high operating leverage, and the subsector led arvy's screen. … Show more

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 

MSCI's stock is pressing its roughly $650 2021 high after years of higher lows, a long base that sets up a durable uptrend. Each pullback since 2022 has stopped higher, signaling sellers are running out. A decisive breakout on strong volume would confirm the business story. MSCI collects a fee as passive funds grew from 1% of US equity fund assets in 1993 to over 50% in 2024, index retention has stayed above 93% for 16 quarters, and it has grown from a $1 billion index firm into four businesses. … Show more

MSCI trades at one of its lowest valuations ever, even though its fundamentals keep compounding while the stock has been flat for years. Its index business, which takes a percentage of AUM from ETFs that track its lists, is capital light, high margin and recurring, with high switching costs; so much of Wall Street runs on MSCI indices that they are nearly impossible to rip out. x.com 

Fair Isaac still looks far too expensive at 90x free cash flow, even after a 75% fall in a monopoly. Even if FCF doubled, the price would equal 45 years of cash flow, and doubling at FICO's size is much less plausible after it raised prices 17 times and angered customers. The test is whether the company can earn the price paid within an investor's lifetime under generous growth assumptions. x.com  x.com  x.com  x.com 

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 

Costco, Apple, Intuitive Surgical, Alphabet and MSCI are amazing companies priced too high for their growth. Costco trades at 46x earnings on high-single-digit growth, Apple at 32x forward on low-double-digit EPS growth, and Intuitive Surgical at 38x forward on low-teens growth. Alphabet, the most attractive, is 33x operating income excluding investment gains. MSCI is 34x trailing on low-double-digit growth; S&P Global is better, cheaper and extremely high quality with similar growth. x.com  … Show more

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 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