Moody's facing significant headwinds near-term (MCO, rated SELL)
Posted on August 21, 2007 at 15:32 PM EDT
I'm still sticking with my previous analysis on holding Moody's for the long term. But whether I like it or not, the bears are having a field day with this one. As Todd Harrison (of Minyanville) says, "respect the ticker, but do not defer to it". I'm trimming back my position significantly, in the hopes of entering into it again at a much lower price point. The reason for this change in opinion is two-fold. Despite the announcement of a 1 billion dollar share re-purchase (or at least borrowing 1 billion for it), the stock cannot seem to find a floor. Other being that I'm disappointed in not hearing anything from management or even defending their previous mortgage bond ratings. I'm just starting to become a bit suspicious. When I would I jump back in? 1. Wait for it to find a floor. With any more bad news, it could possible be below 40. 2. Warren Buffet's cost basis is ridiculously low, so I won't expect him to jump in. But I'm sure this is on the radar of many other great investors. Since the short position has increased during the last month, the bears may not get shaken out until we some well known investors going long on this one. At this time, there's no point fighting a fight I can't win.
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