Sahm Adrangi presented his in-depth investment thesis on S&P Global (NYSE: SPGI) at Wide-Moat Investing Summit 2016.
S&P Global owns a portfolio of high-quality businesses: S&P Ratings (#1 ratings agency), S&P Indices (3 of 5 largest ETFs tied to S&P), Capital IQ / SNL (market-leading provider of data and analytics for finance professionals), and Platts (#1 benchmark price reporting agency for commodities industry). S&P has an exceptionally strong business model, with leading S&P brand commanding high barriers to entry; issuers typically use at least two ratings agencies (and nearly always S&P + Moody’s). The highly recurring revenue base helps to offset the perceived cyclicality of transaction levels (56% of ratings revenue non-transactional; 90% or more of revenue in Capital IQ, SNL and Platts from subscriptions). SPGI comps (MCO, MSCI, FactSet, OPIS) trade at premium valuations; SPGI trades at ~13x EV/EBIT, implying 33% upside.
About the instructor:
Sahm is the chief investment officer of Kerrisdale Capital Management, a private investment manager that focuses on value and special situations investments. Prior to founding Kerrisdale Capital Management, Sahm was an investment analyst at Longacre Fund Management, a distressed debt credit fund. Prior to Longacre, Sahm worked in the bankruptcy restructuring group at Chanin Capital Partners and the leveraged finance group of Deutsche Bank Securities. Sahm holds a Bachelor of Arts in Economics from Yale University.
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