Buy Now or Forever Miss the Gains

Author

Bankfluence
January 01, 2024

In the exploration of potential investment themes for 2024, our attention was captivated by a compelling opportunity with significant short, intermediate, and long-term potential. This revelation emerged from a thought-provoking investment piece authored by Tony Kaplin and Hiliary Lee of Morgan Stanley.

One of the remarkable facets of the investment realm is the propensity for groundbreaking ideas to surface unexpectedly, often during meticulous research on an entirely unrelated company—precisely how this opportunity came to light. Although the company in question wasn't Bankfluence's initial selection, a notable pattern recognition emerged, evoking memories of a previously lucrative investment. While chart patterns may not typically be the focus of most analyst reports, the undeniable significance of this one warranted a closer examination. The unveiling of pattern recognition will be revealed conclusively in the latter part of this article through the presentation of two analogous charts.

MSCI, a preeminent provider of essential decision support tools and services for the global investment community, remains steadfast and optimistic in the midst of macroeconomic uncertainty. Notably, MSCI Inc ($MSCI) adheres to a resilient and predictable business model, with approximately 97% of its revenue being of a recurring nature. The majority of this revenue stems from subscription-based services, constituting approximately 74%, offering valuable insights into future performance trajectories. In the third quarter, MSCI received accolades that underscore the credibility and commitment inherent in its services. Newsweek distinguished MSCI as one of 'America's Greenest Companies 2024,' potentially signaling a trajectory toward ‘green’ (candles) days to come? Additionally, the Global Investor Group honored MSCI with the title of 'Best Index Provider' at the Asia Capital Market Awards 2023, further validating the company's excellence in the industry.

In Q3 of the fiscal year, MSCI achieved key milestones, notably expanding its partnership with Google Cloud to develop gen AI solutions for risk analysis and introducing a conversational AI platform. The acquisition of Burgiss strengthened MSCI's position in total-portfolio investment solutions, encompassing over $15 trillion in assets. The prospective acquisition of Trove Research showcases MSCI's commitment to climate risk intelligence and aligns with global efforts toward net-zero emissions. These strategic moves underscore MSCI's dedication to innovation, sustainable investing, and expanding its influence in the financial and climate intelligence domains.

Q3 Earnings Report Highlights:

-Recurring Subscriptions up 10.7%

-Asset based fees up 12.3%

-Diluted EPS 3.27 (+22%)

-Adjusted EPS 3.45 (+21.5%)

-Repurchased 17.9M of shares in Q3

-$109.2M distributed as dividends

Pattern recognition: As observed in the $XLE chart depicted below, a noteworthy occurrence unfolds approximately 520 days after the 52-week low was traded: the SPDR Energy Sector manifests an inverse head and shoulders pattern. This pattern, historically significant, led to a remarkable upswing, marking one of the most spectacular runs in the recent history of the energy sector. Interestingly, a comparable pattern materializes 541 days after the low recorded by MSCI. Although these investments belong to distinct industries, the recurrence of this pattern demands recognition, suggesting potential strategic implications. 

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While history may not unfailingly replicate itself, its echoes frequently resonate with familiar cadence.

In less than 24 hours, the resonant chime of the bell will inaugurate the commencement of the 2024 market year. The strategic maneuvers and swift flow of orders will mark the initiation of a dynamic landscape. In our opinion, a proactive response at this juncture is imperative, as any delay may curtail optimal gains. We invite you to join us in navigating the imminent tidal wave of opportunities, particularly within the realm of MSCI.