Own companies with an unfair advantage
Moody's is an oligopoly— they have 95% market share in the credit rating industry.

They have a sustainable moat in pricing power: There has been an average 3.5% rate increase per annum for the past 15 years.

Moody's has a moat because if you want to issue credit globally you are required to get a credit rating from one of the three credit rating agencies.

  • Regulation is their moat
  • They've been in business over 100 years
  • The data they've accumulated over all these years is now turning into a SaaS business where customers buy their data

I've bought twice in the last year⤵

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Dillon Jacobs's avatar
Good pick Nathan. I've always wanted to buy $MCO, just couldn't justify the valuation.

Might be time to take another look 😉
Nathan Worden's avatar
@dillon_jacobs always important to consider valuation— It’s a fair concern with Moody’s.
Modern Growth Investing's avatar
I have a feeling they are about to be disrupted.

Do you know what assets they underwrite/rate?
Nathan Worden's avatar
@growthinvesting Ooo I’m intrigued— who do you think has a shot at disrupting Moody’s?

And as far as your question— commercial real estate loan credit risk is one. Are those the assets you were referring to or did you have different ones in mind?
Modern Growth Investing's avatar
@nathanworden nah, thats safe for now, i mean for example, $UPST will under write residential soon and another company i know is underwriting auto,houses, insurance and personal loans, basically everything
Nathan Worden's avatar
@growthinvesting the underwriting arm’s race is on! Is the other company you’re referring to Lemonade?
Nathan Worden's avatar
@growthinvesting and I like that you have high quality filters :)
Ayesha Tariq, CFA's avatar
You’re right to call it an oligopoly. There’s only three ratings agencies worth considering - Moody’s, S&P and Fitch from the UK. The first two being more prominent.



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