Moody's Is Resilient

The feature article in the Money & Investing section of the Wall Street Journal this morning pointed the spotlight on Moody's Corp (MCO). The gist of the article is that Moody's and the other credit ratings agencies are taking heat for "missing" the subprime debt meltdown and short sellers are betting they will lose clients and revenue. Moody's (MCO) traded down all day on the news, closing down 1.11 to 60.39, a loss of 1.8%. In after hours trading it has dropped another 9 cents.

Personally I would be surprised if Moody's traded significantly below $60/share without the help of broader market declines. Why? Well, Moody's has been through this before. They took a lot of flak when they "missed" the problems at Enron and Worldcom; certainly this is no different. The stock may have already priced in future declines as it is already nearly 20% off of its 52-week moving average. On top of those factors Moody's is a resilient company. It has fat margins, rich clients and very little serious competition. I would watch this one closely in the days in months to come. Don't be surprised if Warren Buffett ups his 17.5% stake in the company if the stock dips into the 50's.