Thanks Andrea. I think equity research may be best left in the hands of others, but I might change my mind. Planning on going paid at some point, however.
My only question is using the 2000 ending period for judging Buffett's $KO purchase vs. Moodys. Wasn't it trading at around 50 P/E? Can that really be conservatively expected of even the highest caliber companies? Thanks.
Great question. Yes, Buffett experienced multiple expansion - although from the historical data I don't think it's that extreme by mid/late-2000, when prices had come down somewhat. I think around 30x trailing is more accurate. Still that's almost a 100% increase in the multiple - which is great - but keep in mind that EPS growth over the 12 years for $KO was 15% compounded annually + dividends. Even without the multiple expansion you would have done fine - and I don't think it was the crazy to think that MCO would also experience multiple expansion. Private market transactions in various credit ratings related business had been in the 4-5% earnings yield range over previous year.
I'll address this point in the next weekly digest! Thanks for asking.
This is a very good article. Bravo Larry !!
Why don't you lunch a stock picking news letter ? I'd be a happy paying subscriber!
Thanks Andrea. I think equity research may be best left in the hands of others, but I might change my mind. Planning on going paid at some point, however.
Nice article. Putting the qualitative and quantitative together to take rational action is a heap better than hopium.
Thanks, mate.
Great article. Liked, Subscribed and recommended the sub to get this to its $10b valuation ;)
Greatly appreciated. IPO here we come.
I rarely read a long article with such enthusiasm. Great analysis Larry!
SPGI Moody’s MSCI are among my fav. businesses for their ability to grow with almost no investment requirements.
Glad you enjoyed mate.
Great writeup, I really enjoyed it.
My only question is using the 2000 ending period for judging Buffett's $KO purchase vs. Moodys. Wasn't it trading at around 50 P/E? Can that really be conservatively expected of even the highest caliber companies? Thanks.
Great question. Yes, Buffett experienced multiple expansion - although from the historical data I don't think it's that extreme by mid/late-2000, when prices had come down somewhat. I think around 30x trailing is more accurate. Still that's almost a 100% increase in the multiple - which is great - but keep in mind that EPS growth over the 12 years for $KO was 15% compounded annually + dividends. Even without the multiple expansion you would have done fine - and I don't think it was the crazy to think that MCO would also experience multiple expansion. Private market transactions in various credit ratings related business had been in the 4-5% earnings yield range over previous year.
I'll address this point in the next weekly digest! Thanks for asking.