Jeff Ubben Exits MSCI Stake

Company was trading at 9-year high in price

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Dec 15, 2016
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Jeff Ubben (TradesPortfolio), founder, CEO and chief investment officer of ValueAct Capital, sold out his remaining 1,300,900 shares of MSCI (MSCI, Financial) in the third quarter. The trade had a 0.91% impact on his portfolio. Ubben initially purchase his stake in MSCI during the fourth quarter of 2012. Ubben gained an estimated 123% return with his investment.

MSCI offers content, applications and services to support the needs of institutional investors throughout their investment processes.

The company provides its services to pension funds, endowments, foundations, central banks, family offices and insurance companies, asset management firms (mutual funds, hedge funds, providers of exchange-traded funds), private wealth managers and financial intermediaries (banks, broker-dealers, exchanges, custodians, trust companies and investment consultants).

According to GuruFocus MSCI has a 5 of 10 financial strength rating with a cash-debt ratio of 0.47, an equity-asset ratio of 0.17, an interest coverage ratio of 4.92, a Piotroski F-Score of 6 and an Altman Z-Score of 3.27 indicating that the company is in the safe zone and is not in danger of filing for bankruptcy within the next two years.

MSCI also has a 9 of 10 profitability and growth rating with an operating margin of 41.53%, a net-margin of 22.29%, a return on equity (ROE) of 33.85%, a return on assets (ROA) of 8.16%, revenue growth (three years) of 13.40% and earnings per share growth (EPS) of 16.60% over the previous three years.

Ubben may have decided to sell out for the following reasons:

  • The company was trading its nine-year high in price during the third quarter, and the company had already netted Ubben an estimated 123% return.
  • MSCI was trading well above its intrinsic value during the third quarter.
  • Ubben may have decided that the company had reached its plateau, and it was the right time to cash in on his profit.

Since Ubben sold out his remaning shares of MSCI, the company's market price has dipped by an estimated 6%.

Below is a Peter Lynch chart that shows MSCI is trading above its intrinsic value.

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Disclosure:Â Author does not own any shares of this company.

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