Equifax Inc

We purchased one new position during the quarter: Equifax, Inc. Equifax is one of the three major credit bureaus in the U.S. Lending institutions self-report their consumer lending and payment data to Equifax. That data is then aggregated as a credit report and credit score and sold back to lenders to evaluate the creditworthiness of borrowers. The Workforce Solutions segment has grown double-digits organically over the last 10 years, and management projects it to grow low to mid teens through 2030, all at a margin above the company average. We believe the stock is discounted even without any recovery in mortgage volumes. As for AI risk, 90% of Equifax’s revenue comes from proprietary data that is impossible to obtain without it being contributed directly by lenders and employers. We do not believe AI poses any threat to Equifax’s business.

We purchased one new position during the quarter: Equifax, Inc. Equifax is one of the three major credit bureaus in the U.S. Lending institutions self-report their consumer lending and payment data to Equifax. That data is then aggregated as a credit report and credit score and sold back to lenders to evaluate the creditworthiness of borrowers. The Workforce Solutions segment has grown double-digits organically over the last 10 years, and management projects it to grow low to mid teens through 2030, all at a margin above the company average. Despite U.S. mortgage volumes being 50% below pre-COVID levels, we believe the stock is discounted even without any recovery in mortgage volumes. We do not believe AI poses any threat to Equifax’s business. We are pleased to be shareholders.

We purchased one new position during the quarter: Equifax, Inc. Equifax is one of the three major credit bureaus in the U.S. Lending institutions self-report their consumer lending and payment data to Equifax. That data is then aggregated as a credit report and credit score and sold back to lenders to evaluate the creditworthiness of borrowers. The Workforce Solutions segment has grown double-digits organically over the last 10 years, and management projects it to grow low to mid teens through 2030, all at a margin above the company average. We believe the stock has traded down due to a weak mortgage market and perceived AI risk. Despite U.S. mortgage volumes being 50% below pre-COVID levels, we believe the stock is discounted even without any recovery in mortgage volumes.

We purchased one new position during the quarter: Equifax, Inc. Equifax is one of the three major credit bureaus in the U.S. The barriers to entry are nearly insurmountable for a new entrant. Competition between the three credit bureaus is rational. The Workforce Solutions segment has grown double-digits organically over the last 10 years, and management projects it to grow low to mid teens through 2030. Despite U.S. mortgage volumes being 50% below pre-COVID levels, we believe the stock is discounted even without any recovery in mortgage volumes. We do not believe AI poses any threat to Equifax’s business. We are pleased to be shareholders.

Equifax was one of the Fund’s top detractors in the quarter, with a return of -11.56%. The company, along with others in the software and information services sector, faced challenges as investors grappled with the potential impact of AI on various business models. Despite the negative performance, we continue to believe that investments in Equifax offer attractive upside from current prices, indicating a cautious outlook on its future potential amidst sector-wide pressures.

We initiated a position in Equifax, a provider of mortgage, employment and other data, which manages proprietary datasets that are costly and difficult to replicate. Given that its data is critical to customers’ workflows yet represents a small portion of their overall costs and it operates in a consolidated industry, the company has historically benefited from strong pricing power and consistent growth.

Equifax shares were also slightly negative as an anemic housing market continues to overshadow solid progress across the company’s broader suite of offerings.

We maintain high conviction that Equifax's business moat and competitive advantages are underestimated and provide protection against disintermediation to a greater extent than is currently reflected in their share prices. Equifax and Experian possess vast quantities of non-publicly accessible data sets, and their often-proprietary data moats are formed through direct agreements with over 12,000 institutions. Their value is derived not only from the quality of their data but also from a regulatory barrier due to the strict dispute infrastructure required when operating a credit bureau.

Equifax was mentioned in the context of exiting the position due to a reevaluation of the company’s long-term growth rate and concerns around potential AI disruption risk. The manager did not provide a positive or negative outlook on Equifax specifically, focusing instead on the decision to sell based on broader considerations.

Equifax, Inc. is mentioned as part of a group of very good businesses trading at reasonable valuations. The manager notes that the key to solid outcomes for these companies, including Equifax, is the execution of clear, well-articulated strategies. They express a positive outlook for this group over the next few years, indicating a belief in their potential despite current performance.