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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'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's not a long-term play.
I'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's float after inclusion (I'll back up this claim)
These thoughts aren't 100% my own. A lot of this has been bounced off of @spencerwincer, @cashflow_free, @KushDaddyOG101, @jangler_jingle, and @YounggJustin.
