McGraw

[wescobrk]

Haven't had a chance to research yet but plan to this weekend.

Just curious if any one nibbling on McGraw after almost 30% correction?

[boilermaker75]

With a TTM FCF of of $1B and an EV of $12B it looks interesting and worth looking into--but I have not. Thanks for calling it to our attention. The put premiums are attractive to sell with the March 40-strikes going for $1.15, which is how I like to enter positions. If I find time I will also look into it this weekend.

[wescobrk]

I made a small position in 2014 leap with Moody's today. A bit speculative but my expectation is 12 months from now focus will be back on the earnings power. High 30's operating margin and high 20's net margin, it's twice as profitable than McGraw.

If it goes up when BAC goes down then even better for me.

[boilermaker75]

I made a small position in 2014 leap with Moody's today. A bit speculative but my expectation is 12 months from now focus will be back on the earnings power. High 30's operating margin and high 20's net margin, it's twice as profitable than McGraw.

If it goes up when BAC goes down then even better for me.

 

wescobrk,

 

How are you defining that MCO is twice as profitable as MHP?

 

Just a quick look, less than 5 minutes, comparing EV to TTM FCF I am getting 11.8 for MHP and 16.8 for MCO.

 

TIA,

 

Boiler

[Shane]

I've read notes on Einhorns short thesis.  My understanding is that he thinks the ratings system is flawed and the government or investors at some point will abondone their support for this system.  Does anyone have an opinion of whether this is true or not?  Are the ratings franchises permanently damaged?

 

From my point of view nothing has changed.

[zippy1]

From Alison Frankel.

http://newsandinsight.thomsonreuters.com/Legal/News/2013/02_-_February/S_P_s_sham_First_Amendment_defense_against_state_AG_cases/

Their cases assert instead that S&P lied to investors about the independence and objectivity of its ratings, in violation of state laws prohibiting deceptive trade practices. It might seem like a legalistic distinction - did S&P supposedly issue misleading ratings or did it issue misleading statements about its rating process? - but the twist makes a big difference to the rating agency's First Amendment defense.

This time may be different in that the rating agency may have to change how they charge people.

[wescobrk]

Quote from: wescobrk on February 08, 2013, 09:59:47 AM

I made a small position in 2014 leap with Moody's today. A bit speculative but my expectation is 12 months from now focus will be back on the earnings power. High 30's operating margin and high 20's net margin, it's twice as profitable than McGraw.

If it goes up when BAC goes down then even better for me.

 

wescobrk,

 

How are you defining that MCO is twice as profitable as MHP?

 

Just a quick look, less than 5 minutes, comparing EV to TTM FCF I am getting 11.8 for MHP and 16.8 for MCO.

 

TIA,

 

Boiler

 

Hi Boiler,

Not on valuation but on per dollar of capital employed. I was wrong, operating margins (normalized, ex prospective lawsuits) operating margins are even better-mid 40's!

Does anyone know of another company with higher margins?

[rogermunibond]

http://professional.wsj.com/article/SB10001424127887323511804578296293058057484.html

 

MCO employees were told to avoid IM, email, etc when discussing sensitive issues like MBS ratings gaming.  Face to face only.