This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Moody's Still Rewarded for Showing Up: Street Whispers

NEW YORK (TheStreet)--If there was one company many people thought would get upended by the crisis, it was Moody's Investors Corp (MCO).

The top ratings its analysts gave to complex, risky bonds, allowed them to be sold into the marketplace, caused losses throughout the financial system too large to count.

In one instance, the ratings agency gave triple-A ratings to billions of dollars' worth of bonds that should have been four notches lower due to a computer glitch. Still, upon finding out about the glitch in early 2007, Moody's kept the ratings in place until January 2008, the Financial Timesreported. Moody's eventually acknowledged the error and disciplined certain employees.

Lawsuits followed, but so far they haven't made much of a dent in Moody's share price. There was the Public Employees' Retirement Systems of Mississippi, for example, which argued in 2008 that Moody's was responsible for duping them into buying $63 billion of investment-grade mortgage-backed securities. Moody's got the case thrown out, however, since the plaintiffs claimed Moody's effectively acted as an underwriter of the bonds. But even Judge Jed Rakoff, about as sympathetic a judge as the plaintiffs could have hoped for, concluded that argument didn't fly.

The plaintiffs had to take that tack because Moody's has hid behind the first amendment, successfully claiming its ratings opinions are protected as journalism. [The 2010 Dodd Frank law subsequently took away those protections.]

And yet Moody's, while hiding behind journalists' first amendment protections for one last crisis, has done a far better job of making money than most journalism enterprises. Profits have steadily grown at Moody's, and in 2011 were up more that 40% from their lows in 2009. Meanwhile, The New York Times Co. (NYT) has gone from a meager profit to a loss during the same time frame. While The Washington Post Co. (WPO) has shown earnings growth over that two year period, it has been choppy, a record that is reflected in its share price. While shares of both the Times and the Post and have declined more than 50% in the past five years, Moody's shares have lost just under 2%.

Perhaps more significantly, that 2% five-year decline matches Wells Fargo (WFC), and handily beats JPMorgan Chase (JPM) and Goldman Sachs (GS).

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,031.72 -7.77 -0.05%
S&P 500 1,987.32 -5.05 -0.25%
NASDAQ 4,521.8520 -10.2520 -0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs