Sunday, September 16, 2007

Moody's Coproration MCO

Moody's (MCO) is an interesting company. To the unsophisticated like me it seems like they give you three letters like "AAA" and get a load of cash in return. Even Warren Buffett holds a stake. It seems like the perfect business to own - has a moat and has low requirements for capital.

What could go wrong? Recently the price has fallen on fears of lawsuits related to its role in the subprime lending mess. I am not qualified to comment but I feel that "Cogitarius" has done a good job summing up the issues on a Motley Fool board here.

So should I buy? Naah! If you know me you know that I have a way of avoiding value traps. I will not buy unless there is some confirmation from insider buying. You can see the insider trades for Moody's here. So if I see more insiders buying in the open market I will jump in.

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