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 

Financial tollbooth businesses are a great place to invest because they are embedded in the system, take a cut whenever money moves or decisions are made, and need little capital. S&P Global and Moody's, tied to credit markets, are hard to replace; FICO is strong but more exposed to pricing backlash; CME gains when volatility lifts volumes; LSEG fits too. MSCI is the favorite, with fees spread across trillions tied to benchmarks for durable pricing power, and insider buying near current prices. … Show more

FICO's moat is starting to get disrupted, and the premium multiple holders once defended has not held up. Two years ago the stock traded at 80x EPS on the argument that a high-quality compounder with a moat deserved it; that multiple has since compressed by about 80%. FICO would need to rise 280% to regain its all-time high, and there is a good chance it never does. x.com  x.com  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 

Amazon's moat and growth make it the portfolio anchor. S&P Global arguably has the world's widest moat and could beat the market long term with minimal downside risk. MercadoLibre adds Latin American commerce, fintech and ad growth. Reddit has multibagger potential if things go right; its very fair valuation, relatively wide moat, cash generation and pristine balance sheet protect downside. Celsius adds double-digit beverage growth at a conservative valuation, insulated from the others' risks. … Show more

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 

Six high-quality favorites of well-known investors trade at discounts: Uber 28%, held by Bill Ackman and Thomas Russo; Fair Isaac 53% and Intuit 46%, held by Dev Kantesaria and Lindsell Train; Microsoft 29%, held by AltaRock and Chris Hohn; Brookfield 23%, held by Josh Tarasoff and Chuck Akre; and S&P Global 27%, held by Kantesaria and Hohn. x.com  x.com  x.com  x.com  x.com  x.com 

SoFi, AMD, Amazon, Uber, Netflix, Brookfield, ServiceNow, Zeta, Oscar, AppLovin, Duolingo, MercadoLibre, Meta, Snap, Celsius, Adobe, Pagaya, Fair Isaac, CoreWeave, Palantir, Intuitive Surgical, Mastercard and Wingstop can each outperform the S&P 500 over the next five years. Their mix of growth, earnings power, market opportunity and execution gives each a real shot at beating the index through 2031. x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  … 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 

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