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When I think about the MSO story, I always come back to the adoption of institutional ownership. Interestingly, the Big 4 are already covered by more analysts than ~60% of the S&P 500.
Despite the lack of major institutions taking a stake, a lot of research is being published on the MSOs from middle-market/boutique/Canadian investment banks.
I highlight this because there will come a point when bulge bracket investment banks will feel comfortable recommending the MSOs to their clients. When this happens, I would expect # of analysts for each of the Big 4 to jump closer to 30.
Keep in mind, less than 20 S&P 500 companies have > 30 analysts covering, so my prediction could be wildly inaccurate. Not even MSFT has 30 analysts covering.
*Only looking at analysts that are approved/considered by FactSet*
*Only looking at analysts that are approved/considered by FactSet*
Several dominoes have to fall for this to play out, but this is one component I& #39;m looking for as the MSOs potentially go into bubble territory.
Regardless of valuation, the investment banks will want to make an easy buck. Selling a story that emphasizes social justice, high growth rates, and elevated EBITDA margins will make this a fat pitch for investors to swing at, even if it& #39;s not a long-term play.
I& #39;ll save this for another thread, but index inclusion post uplisting will be a massive boost to the MSOs, on top of increased active institutional ownership. I estimate the S&P 400 or S&P 500 will absorb 20%-30% of the Big 4 MSO& #39;s float after inclusion (I& #39;ll back up this claim)
These thoughts aren& #39;t 100% my own. A lot of this has been bounced off of @spencerwincer, @cashflow_free, @KushDaddyOG101, @jangler_jingle, and @YounggJustin.
