Moody's Corp (MCO)

Politicians are looking for a culprit for the subprime mess. The rating agencies come in handy. MCO could become the Arthur Andersen of the Credit Rating industry.

I don't like veiled deceptive things.. What Warren Buffet did shows the integrity, that Moody's offers.. Remember: How do you tell when a politician is lying? When they are talking..

Have a blessed day!

David Einhorn of Greenlight Capital has come out publicly to say that he's shorting MCO. The reason is simple: information is beginning to come out that Moody's has been pumping its ratings of CDOs and CMBSs for years, and may in fact still be doing so. Warren Buffet has been unloading shares as well. I'm going with the guys who spend much more time following this one. Underperform for the foreseeable future.

Moody's accused of issuing inflated ratings: report
On Wednesday September 23, 2009, 3:07 am EDT
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(Reuters) - A former analyst with Moody's Corp (NYSE:MCO - News) has accused the credit ratings agency of issuing inflated ratings, and has taken his concerns to U.S. congressional investigators, the Wall Street Journal reported on Wednesday.

In a letter dated July, obtained by the paper, Eric Kolchinsky accused Moody's Investor Service of issuing a high rating to a complicated debt security in January, in spite of it being aware it was planning to downgrade assets backing the securities.

"Moody's issued an opinion which was known to be wrong," Kolchinsky wrote, along with detailing other instances of inflated ratings issuance, according to the paper.

The paper said a Moody's spokesman declined to comment on the January rating under scrutiny, but had said Kolchinsky refused to cooperate with an investigation into the issues he raised, and was suspended with pay.

Kolchinsky is scheduled to testify on ratings firm reform before the House Committee on Oversight and Government Reform on Thursday, the paper said.

Moody's was not available to comment.

(Reporting by Biswarup Gooptu in Bangalore; Editing by Dan Lalor and Chris Wickham)

Their role in the financial meltdown will come to light & the company will (& should) be punished.

Continued legal battles will deter investors.
There's a growing consensus that rating agencies are worthless, reflecting the interest of Wallstreet rather than the true evaluation of an asset.
Stay away from this one until the water settles.

Legal problems and lack of confidence.

It's about time! http://www.moneymorning.com/2009/09/11/credit-rating-firm-lawsuit/

Death of the golden goose. --

Moodys = MCO
Look at the company
They got half their earnings from structured products.
Moving forward this is GONE.

Their huuuuuge premium built into the shares was because the company had a golden goose laying golden eggs all over the place.
There were only a few of these golden gooses.

Unfortunately for MCO, the current management has poisoned their golden goose. Credibility was the name of this goose.
Buffett has been mourning this tragic loss -

When you look at what is left....there is nothing. The goose has provided all the operational side of the business.

Management already dumped all their assets and took on huge amounts of debt to buy back bloated shares (at a price that was counting on the goose to live a long healthy life.)

The debt payments are going to continue to come....but unfortunately they have run out of golden eggs to sell to cover these incoming payments.

Add the uncertainty and cost and time of litigation ----- who in the world is buying this bloated crap ?
Maybe someone initiating a squeeze...but that is dangerous ground in my opinion.

There is no value here. Only an albatross of debt and calamity.

Can someone give me a single reason to buy this equity at this current valuation ?

I would love to hear some reasoning.

If you are delusional enough to want to own credit rating agencies...why would you ever buy MCO -vs- MHP....which has assets, a semi-competent management team, and a much more broad and diversified operational business.

MCO is the one short I have held from the $32 range.
All my other in the money puts - I take off when I get profits

These are hedges -vs- my 80% long portfolio which consists of stocks that trade at rational valuations relative to all the things that MCO lacks.

MCO has a liquidation value of around -$5 per share not counting any of this litigation, diminished credibility, and rapidly decreasing prospects for future revenues (let alone earnings)

Massive debt, loss of economic moat, unethical-untrustworthy-incompetent management, and now litigation out their ears.

I ask you again - what reason would you want to own this security ?

Give me a few reasons. I have given you plenty of mine for betting against this company.

(note - hedged some puts with at the money calls - and bought mhp calls for further hedging of this short position)

MCO does not have a lot of upside at the current price, but there is a MASSIVE downside if they are found liable for the AAA bond rating for SIVs and other asset backed securities. So far it looks like it is a distinct possibility.

Buffett selling more shares

Einhorn shorting. rating service is worthless

David Einhorn

The rating industry is under attack by legislators -- knowledgeable or not. Not good news for Moody.

I just learned today that Berkshire Hathaway reduced their stake in the firm and that is more then enough to make a long-term bear out of me. I was already bearish on them and now I'm REALLY bearish. Buffet VERY seldom sells so if they are divesting, that is not a good sign.

I have to deal with the rating agencies in my line of work and I specifically have to deal with structured credit groups which is where this whole credit maelstrom is emanating from. Moody's is BY FAR the worst of all the rating agencies that I have to deal with. They have had mass layoffs and personnel exodus as a result of the crisis. The people who remain don't understand well what they've inherited and the mess they have to work with. They are a rudderless organization in my opinion.

Then there is the question of litigation risk, which is huge for this company right now as they have conflicts of interest galore. No matter what they do, they are definitely going to get sued, it's only a question of by whom and whether they will be successful defending themselves. The rating agencies all bear culpability in this credit debacle, but again, in my personal experience Moody's has done a worse job of managing this then anybody. They are also consistently off on their credit calls.

The government is out to make a scapegoat out of somebody and if you have to pick a rating agency to hang, it would be these guys over S&P or Fitch any day of the week. Those firms do a much better job of credit analysis and exposure management in my opinion. They also have much more talented people which will means a lot for long-term viability in times of crisis.

I join Greenlight Capital's David Einhorn and apparently Berkshire's Warrne Buffet in giving the thumbs down to Moody's!!

If Buffett sells, so should you. Nobody knows their business better than him, MCO's largest shareholder.

Einhorn is a brilliant guy and his argument is compelling. At least compelling enough for me.

Agree with David Einhorn that company has lost credibility. Regulatory change is coming...and it won't benefit Moody's.

Agree with all this bearish sentiment. They failed so spectacularly during this crisis - why do they exist?