Moody's Corp (MCO)

MikeMark (98.05) Submitted: 2/13/08 2:49 PM

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Well said.

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DemonDoug (99.68) Submitted: 5/14/08 12:02 AM

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With all due respect, David, their business has in large part been in lockstep with industrywide fraud and backroom deals wrought with purposeful neglect of ratings. Banks will recover? Sure they will... in about 10, 20 years. As much as I respect you and your brother for your stockpicking prowess, and I can see that your pick currently is in the green on CAPS, I cannot disagree with you more on the fundamentals of Moody's. This is a company that has refused to downgrade MBIA and Ambac's AAA rating - in the face of billions of billions of dollars of losses, where the market has (correctly) predicted a high probability of these companies going completely out of business. Meanwhile, Moody's, along with Fitch and S&P, have artificially kept down municipal bond ratings while maintaining lower standards for corporate bonds, in what can only be termed as industrywide collusion.

Oh, I understand their business all to well. Fleece taxpayers while over-rating bonds to their buddies on Wall Street.
http://www.reuters.com/article/domesticNews/idUSN0336806020080303?pageNumber=1&virtualBrandChannel=10150

" "The Agencies' own studies have shown that corporate issuers with higher ratings default at a much greater rate than municipal issuers. Taxpayers wind up paying through the nose for this dual standard. So we think it's time to end that system," he added.

Many municipal bond issuers have lower ratings than their corporate counterparts despite a lower default rate because rating agencies have historically evaluated the risk in the $2.6 trillion municipal bond market more conservatively.

Lower ratings mean issuers had to pay more to borrow money in the $2.6 trillion municipal bond market, costs that are borne by taxpayers.

To lower their borrowing costs, issuers paid premiums to bond insurers, effectively renting guarantors' triple-A ratings, many of which turned out to be worthless because of insurer subprime losses."

And you want me to invest in this garbage? I'm sorry David, Moody's is no better than Arthur Anderson or New Century. It is criminal that MBIA and Ambac STILL have AAA ratings. And you know what? My guess is that while the pasty SEC does nothing, there will be many lawsuits filed in the coming months and years as the fallout from Moody's (and others') failures come to light. Plus, don't you think the fact that california has stopped buying bond insurance will hurt their business? Let this pig get over 50, I'll put the red thumb on it for sure. Moodys' business is not going to come back any time soon.

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DemonDoug (99.68) Submitted: 5/21/08 2:20 PM

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7 days after I posted this reply, moody's down 14% on "ratings errors." Uh huh. David, aren't you guys always the ones preaching about responsible management, transparency, etc.? Moody's should be called on the carpet by the fool.com, not blessed by one of its founders.

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boredgenius (49.74) Submitted: 6/24/08 10:15 AM

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Yep, MCO is absolutely getting hammered.

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ResearchLover (< 20) Submitted: 8/20/08 9:08 PM

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If someone else can do the job better, by all means, give the job of rating agency to someone else!

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FleaBagger (96.00) Submitted: 9/16/08 2:11 PM

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David -
I respect you and love you like a brother. But Moody's is going to be bankrupt within 2 years, and I don't see any upside catalysts between now and then. How long will it be before class action lawsuits come against Moody's and McGraw-Hill's Standard & Poor's? And unlike McGraw-Hill, Moody's doesn't have another line of work or positive equity. Moody's is one of the worst-run medium-large businesses in the world.

Bear Stearns, Lehman, AIG, and Merril Lynch shareholders have reason to sue Moody's for fraud. Look for MCO to approach 0 within 2 years.

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ikkyu2 (99.50) Submitted: 10/12/08 3:20 PM

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I am certainly "naive" about the rating business. I will not say that I "know" the business. What I have observed over the last couple of years is that ratings agencies have consistently rated things AAA that were in fact worthless, and that in some cases at least they have felt handcuffed to these ratings because altering them would put companies out of business.

They then recently changed their tune and started downgrading and kicked off the worst credit crisis in history.

After this blows over, will the ratings agencies in their current form still be relevant? Look at last week - 700bp spreads on GE CDSes - and this is a company supposedly rated AAA. The market is ignoring the rating - so why is anyone paying for it again?

If a company makes an information product, and no one wants the information - because it is old-school, outmoded, obsolete, non-useful - they can go out of business very quickly. I'm sure anyone who was around for the tech bust of 2000 can understand that principle.

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