S&P Global (NYSE:SPGI) is a collection of businesses that provides ratings and benchmarks that are essential to financial markets around the world. Bonds that are issued with an S&P rating pay meaningfully less in interest per year, which generates savings for debt issuers far in excess of the cost of the rating. Also, ETFs and mutual funds tied to S&P Global’s indexes, especially the S&P 500, are gaining market share in the fast-growing passive investing market. And S&P Global’s data and analytics services provide unique insights that help customers make critical decisions across their businesses. Each of S&P Global’s segments share the common characteristic of providing value for customers that is much greater than the prices they charge. As a result, S&P Global is able to raise prices and generate above-average earnings growth. Indeed, over the past five years, S&P Global has grown its earnings per share by over 20% annually, while returning over 100% of free cash flow to shareholders. We believe S&P Global is an exceptional company with a long runway for growth, trading at a price that is below our estimate of intrinsic value.
From Bill Nygren (Trades, Portfolio)'s first-quarter 2019 Oakmark Fund shareholder letter.