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Strategies & Market Trends : Buffettology
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To: Freedom Fighter who wrote (2631)8/3/2000 11:50:58 PM
From: James Clarke  Read Replies (3) of 4690
 
re: DNB

If you're looking for a valuation, Mike's got a great one on his site. You wish you could get that sell-side research that professionals get? Believe me, Mike's report is more useful than anything I have read from the sell-side on DNB. Wall Street is asleep on this one.

I don't have the annual report in front of me for specific numbers, but I think Moodys alone is worth 25-30 and growing. Moodys is simply a great business - this is why Buffett bought it. The Dun & Bradstreet business is not easy to value, but it seems intuitive that it has value for the irreclicable database. Moodys is the part I want to own, but the D&B business seems like an interesting takeover for Equifax or the like. I'm thinking total value of about 38-40, but I've seen others talking about 50.

Combine that with a catalyst and I'm a buyer. I doubled my position about a month ago as I saw the catalyst get closer and the price went back into the 20s. I may add again, and then sell half the shares of post-spinoff Dun & Bradstreet if the price doesn't tank on the spinoff. Moody's is what I want to own big. This is a business with a HUGE moat that has grown at something like 18% for the last 20 years and requires almost no capital. Its not too late - get the annual report - the entire investment case is laid out right in the Chairman's letter. The fact that Buffett bought the stock in the mid-high 20s just tells me to believe my gut on this one.
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