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Is it Worthy to Buy S&P Global (SPGI) Shares?

·3 min read

Baron Funds, an asset management firm, published its “Baron Durable Advantage Fund” second quarter 2022 investor letter – a copy of which can be downloaded here. Baron Durable Advantage Fund (the “Fund”) declined 15.7% (Institutional Shares) during the second quarter, roughly in line with the 16.1% decline for the S&P 500 Index (the “Index”), the Fund’s benchmark. Year-to-date, the Fund has declined by 24.4% compared to the 20.0% decline for the Index. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Baron Durable Advantage Fund mentioned S&P Global Inc. (NYSE:SPGI) and explained its insights for the company. Founded in 1917, S&P Global Inc. (NYSE:SPGI) is a New York, New York-based publicly traded corporation with a $122.4 billion market capitalization. S&P Global Inc. (NYSE:SPGI) delivered a -22.22% return since the beginning of the year, while its 12-month returns are down by -18.68%. The stock closed at $367.06 per share on September 08, 2022.

Here is what Baron Durable Advantage Fund has to say about S&P Global Inc. (NYSE:SPGI) in its Q2 2022 investor letter:

"Another example is S&P Global (NYSE:SPGI), the leading rating agency and data provider, whose stock declined 29.0% year-to-date and 17.5% during the second quarter as a result of growing investor concerns over the slowdown in debt issuance. While debt issuance volumes have seen a dramatic decline – the worst quarterly decline in a decade (down 41% year-over-year in the second quarter based on Goldman Sachs estimates), – and this led management to withdraw its 2022 guidance in early June, we do not believe it would result in a permanent loss of capital.

First, ratings represent only about 30% of S&P Global’s total revenues. Second, despite inherent volatility in quarterly or annual issuance, over the long-term issuance volumes follow the trends in levels of debt outstanding, which has compounded in the mid-single digits for many years. Lastly, we believe that S&P Global’s strong competitive positioning will enable it to continue benefiting from pricing power, while taking advantage of secular tailwinds such as the growth in passive and ESG investing, international expansion, and the growing demand for data analytics."

Photo by AlphaTradeZone

Our calculations show that S&P Global Inc. (NYSE:SPGI) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. S&P Global Inc. (NYSE:SPGI) was in 84 hedge fund portfolios at the end of the second quarter of 2022, compared to 97 funds in the previous quarter. S&P Global Inc. (NYSE:SPGI) delivered a 9.10% return in the past 3 months.

In August 2022, we also shared another hedge fund’s views on S&P Global Inc. (NYSE:SPGI) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.