MSCIMSCI (MSCI) develops investment indexes and portfolio risk tools that are used by investment managers and analysts to construct investment funds and measure performance. As alternative investment strategies proliferate the market, alternative index products are becoming crucial tools to adequately measure how a fund is stacking up. That leaves MSCI with ample room to license its newer index products right now.
At the same time, the popularity of ETFs has left fund sponsors searching for unique index funds to pitch to investors; MSCI has been a major licensee for ETFs, particularly in through emerging market indexes.
The vast majority of MSCI's customers access the company's offerings through subscriptions , providing MSCI with a recurring revenue stream that renews at approximately 85%, thanks to the extremely high switching costs involved with changing a performance index or risk analysis tool.Like Moody's, MSCI benefits from an asset-light business model that generates deep net margins and throws off impressive cash flows. With short-sellers bidding the firm up to a short ratio of 9.2, this financial data stock presents an attractive short squeeze opportunity. As of the most recently reported period, MSCI comprised 4% of Eton Capital's portfolio.
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