MSCI Inc. (MSCI-N)

Only 3 companies do the benchmarking, and all money managers need to use them. The index business continues to grow, as does the ETF business. Bought a real estate company that does indexes in that sector. Lots of opportunity to grow. Lots of free cashflow. Minimal capex, so revenue falls right to the bottom line. Yield is 1.1%.

Has 80% gross margins and high operating margins. The passive investing business continues to grow. MSCI has moved their analytics and index businesses into areas like real estate, which offer good growth. Demand for their analytics continues to grow; it's needed for risk management. MSCI is in an oligopoly.

Index grader, risk management around benchmarking, analytics. Only 3 big players. Money managers need to use an index. 80% gross margins, 53% operating margins. Cashflow machine. Going into other asset classes such as real estate. Pricing power has flattened. BlackRock is one of its largest clients, a risk. Yield is 1.2%.

Financial data, benchmark index sector. Likes the subscription nature of the sector, recurring revenue. Trades at a high multiple, and pulls back when market is down. See her Top Picks.

All his Top Picks today are high margin, low capex, run by great management teams, generating lots of free cashflow.

Index business -- fund managers need to use benchmarks, owned by MSCI, for which they pay a licensing fee that goes up every year. 290K indices that they sell. A Top 10, great business in the world, but valuation always expensive. Big dip in April-May, missed earnings expectations. 

A play on global growth, generates lots of free cashflow. Topline and bottom line should grow by double digits for a very long time. Yield is 1.3%.

They raised their dividend by 16%. Their last quarter shot the lights out and they raised dividend. After shares have pulled back 10%, it's now a buying opportunity.

This company does ratings and builds indices. It can create custom indices for almost anything. It benefits from the boom in ETF's and Index funds and receives license fees. It trades at 45X earnings but as a growth stock it has done well. You could buy on the recent pullback.

On the list of great companies to own when they get beaten up. Problem now is it's run a lot, expensive multiple. Great data service provider. Sector's done well. If you own it, trim a bit and take some profits. He owns Blackrock (BLK) in the sector, which has long-term growth and a lower multiple.

A beautiful chart. Wish all his charts were like this. It's gone straight up with little downside.

This is one of his largest positions in their portfolio. He believes in active investment management, however, the world of ETFs is a juggernaut. This company makes custom indices for its clients. This success is likely to continue. He would buy it here.