The Jensen Investment Team Adds Moody’s Corporation to the Quality Growth Strategy
Founded in 1909, Moody’s Corporation (MCO) is a global risk assessment firm focused on helping clients make better decisions. The company is best known for its investor services business, where it is a global leader in the issuance of credit ratings. Moody’s also boasts a growing analytics business that provides credit opinions, private company information, and commercial real estate data. Moody’s is a geographically diverse company, deriving approximately 45% of revenue outside the United States.
The investment case for Moody’s is based on its global dominance in credit ratings, high customer retention rates, and high degree of recurring revenue. The credit ratings, which are bolstered by Moody’s global scale and the strength of its brand among credit investors, represent a key cog in the function of capital markets activity. The analytics business provides key information for increasingly prevalent “know-your-customer” requirements for banks and insurance companies, resulting in customer retention rates in excess of 90%.
We are pleased to add Moody’s to our portfolio. In our view, Moody’s demonstrates many of the “Quality Growth” attributes we favor, including competitive advantages, high returns on capital, and consistent free cash flow generation. We expect Moody’s to grow and create business value due to increasing capital markets activity and regulatory complexity.
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