I think that Berkshire has a significant percentage of its holdings in Moodys, and M* thinks the stock has strong growth prospects. I bought some in the recent selloff. Anyone else?

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a low for the year. Ken

Originally posted in thread: 249

& S&P only got around to a downgrade days before the bankruptcy was announced.
At this point, many firms are considering having in-house ratings agencies because they realize that the official system is irreparably busted.
This is one stock I wouldn't touch with a ten foot pole.

Originally posted in thread: 249

they downgraded Enron's bonds after Enron announced they had overstated earnings for five years. Moody's like all rating services can only go by what the company reports (certified by an "independent" accountant firm). AA lied, Enron lied, and Moody's had no reason to believe anything other than what they reported.

Disclosure: I have no stock in Moody's, and had none in Enron.

Originally posted in thread: 249

at best has a duopoly and at worst has oligopoly (what a mouthful of words!!).

if i had some cash lying around, i would be loading up.

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One reservation...they have not grown book value over the last decade. W.B. refers to book value as a proxy for intrinsic value. Something looks wrong here that it has not consistantly increased over the last years..

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i am giving this reply by my understanding and NOT research so could be very much off base . correct me if i am wrong.

book value is only a useful resource for industries like industrial materials, consumer goods etc etc.

for a company that rates debt or for that matter some other company that is based mostly on IP (intellectual property) looking at book value wont tell you any story. i am regurgitating from my head something i read about book value not being a good estimate of some specific type of industries. long time back i read somewhere..

i could be totally wrong though.

Originally posted in thread: 249

It's borrowing money to buyback shares.

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when considering a "net-net" value play. The old Benjamin Graham model.

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Is all the really bad news in?

What may be different this time, is that soon the lawsuits are going to really fly. Moodys will be sued by a vast number of parties, and these suits / settlement may be costly.

I am just throwing this out there for consideration, and have not looked very closely at the fundamentals.

Do you all think this HUGE tide of upcoming lawsuits are already in the price?

Originally posted in thread: 249

lawsuit issue is priced in or not. When trust is violated it's gone. This firm has suffered a severe blow to its reputation.
Congress may act to restrict its function since it's obvious that there's a severe conflict of interest having fees paid to Moody's by the very entities that want to get good ratings plastered on their bonds.
The monopoly (or duoploly) isn't worrking.

Originally posted in thread: 249

http://biz.yahoo.com/rb/070819/cramer_barrons.html?.v=1

however, M* thinks their moat is intact, even after congress passed laws that faciliates entry of new players in the market.

if there ever was a "toll road collector" business, this is one.

Why am i not buying?
i am still worried about the slew of lawsuits coming, depressing the stock for years to come. does anyone see any red flags in this firm using debt to buy back shares. is it because they think its a value or is it because they are propping up the stock price.....wish i knew some answers to these.

Originally posted in thread: 249

sorry about the link in previous post. its from my clipboard and i thought i was pasting a link to an article showing some senator calling into a review on the ratings agencies.

today Moodys is down on heavy volume trading

Originally posted in thread: 249

same issues that are involved this time around. They provide an opinion. M* provides an opinion. this is free speech.
They will no doubt be in court but precident has already been established. Berkshire Hathaway owned about 19% of the stock before they (Moody's) borrowed to retire additional stock.
The feeling is that someone with the integrity of W.B. could re-establish the tarnished reputation of this company. The same people think W.B. should buy Countrywide. it seems to me that Wall Street is lacking people with a lot of integrity if the only one anyone can come up with to turn things around is W.B. If this is so, it is a sad state of affairs.

Originally posted in thread: 249

On the potential lawsuits, and I am not at all sure precedent has been set. It is one thing to miss the call on one company or maybe two. It is entirely another to sign off on CDOs with some questionable structures, which will definitely take far greater losses than the grades of their respective tranches would indicate.

Also, do not be surprised when the politicians pint to these guys, when they start the roundup of the usual suspects. An excellent way to buoy one's political fortunes would be to lay blame on everyone they can. Moodys will be on that list I bet. It would not even surprise me if these firms became regulated, like the accounting firms. That is a lot to get over.

Also, here is a quote from David Dreman. Its just his opinion, but I do think he is a good guy to listen to, when it comes to value investing:

"...Although their price/earnings multiples look cheap, do not buy stocks linked to the ratings agencies: namely that of Moody's or McGraw-Hill, parent of Standard and Poor's. If there is an uproar on bad credit ratings, these companies will suffer."

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I have this stock and McGraw Hill on my watch list, and would definitely buy them both; once some more bad news coms in.

You have at best a triopoloy, between Moody's, S&P, and Fitch. The required work to build the infrastructure to match one of these firms would be HUGE. So maybe one might wink out, but frankly I think its unlikely.

So I definitely think this is a good general idea. I just think its a bit early is all.

Originally posted in thread: 249

I wonder if the ratings agencies will lose their franchise or become regulated as a result of the current problems.  Either would probably not be good news for them, but I am still definitely interested in buying.  Someday...

Fitch is French owned. Do you think the American Congress will harm S&P and Moodys to leave a French company to own the business? Doubtful. They may wish for a whipping post in order to CYA themselves, but they will thread lightly. As always, they Talk Loud and Carry a Small Stick.