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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: AFed who wrote (50799)	2/6/2013 8:51:58 PM
From: E_K_S	Read Replies (1) \| Respond to of 78705

Moody's Corp. (MCO) -NYSE goo.gl You might also want to look at Moody's Corp. (MCO) -NYSE as it has similar metrics as MHP. Buffet owns 24M shares of MCO bought right around current prices. Both companies could have some litigation event so for now I am watching MCO and have taken no position. EKS

To: AFed who wrote (50799)	2/7/2013 12:09:06 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78705

MHP: Two points: For a business that generates $1bn in annual FCF, growing at +10% If you believe that it will grow FCF at $10% in foreseeable future, then it is cheap. However, it has not grown FCF at 10% in the last 10 years, so it's only your belief that it can do so consistently in the future ( gurufocus.com for quick history of their FCF and other metrics) nor save them from settlements totaling in the billions of $'s, If you estimate settlements in billions of $'s, you should discount them from your $1bn FCF per year. This will crimp the valuation quite a bit. Personally, I don't believe they will pay billions in settlements, my guess would be maybe $1bn at most. But I also don't believe they will grow FCF at 10%+, so it's too expensive for me right now. I agree that MHP is a bit more attractive than MCO. I won't buy either.

To: AFed who wrote (50799)	2/7/2013 11:18:18 PM
From: Spekulatius	1 Recommendation Read Replies (3) \| Respond to of 78705

AFed - I think MHP is an interesting value pick, but your EV value numbers are a bit off since S&P's numbers indicate a 12.5B$ EV and we assume they know what they are doing :-). i think the fine will be way less than 5B$, the important thing to notice is that this is not a criminal lawsuit, so I think it's going to be more a slap on the wrist kind of fine. The real risk is not a one time fine, it is the risk that future legislation impact their business (by for example enhancing competition by allowing new entries into the rating space, or curtailing their ability to work with customers to creating securities with a certain target rating). FWIW, these rating agencies are playing a pretty obvious game, by stating on one side that their rating is merely an opinion, but on the other side, this opinion can have very serious consequences when it automatically triggers collateral payments and such (which happened to MS for example when they were downgraded). Then there is the fact that there are only 3 opinions that matter (MCO, MHP and Fitch) and other entries in the space are basically barred also does not make sense with the "opinion" claim. The famous line in the Spiderman movie was "Was great power comes great responsibility". Apparently, the ratings agencies don't believe this applies to them, but that is what makes it a great business. And I believe, it will probably stay that way... I am considering a buy here.

To: AFed who wrote (50799)	2/10/2013 9:50:11 AM
From: Bocor	2 Recommendations Read Replies (2) \| Respond to of 78705

I have sold some MHP puts for February....I like to buy when there is "blood in the streets"...it seems the best time to really get value. Might want to listen to the earnings call to listen to on the progress of government investigations. They have to say something..... Got WAG down at $28 that way, CCL during the cruise mess in Europe, among many others. I hold the LMT Feb 85 puts, and sold the March 82.5 LMT puts. If it gets that low, I will take the yield and wait for the eventual war to break out in the M.E. Of course MHP could be a falling knife, so it's only for rebels without a cause {except to make money} and a small portfolio speculative position, but when everyone thinks it's going to zero, ala RIMM, it's probably time to go in the other direction.