Is MSCI a Smart Long-Term Buy?

Richie Capital Group, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here.  A quarterly portfolio net return of -5.0% was recorded by the RCG Long Only strategy for the third quarter of 2021, while the RCG Long Short Fund lost -5.3%. The fund’s closest benchmarks, the Russell 3000 Index and the Equity Long-Short Index returned -0.1% and -0.2% respectively for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Richie Capital Group, in its Q3 2021 investor letter, mentioned MSCI Inc. (NYSE: MSCI) and discussed its stance on the firm. MSCI Inc. is a New York, New York-based finance company with a $50 billion market capitalization. MSCI delivered a 1.98% return since the beginning of the year, while its 12-month returns are up by 1.93%. The stock closed at $598.30 per share on October 13, 2021.

Here is what Richie Capital Group has to say about MSCI Inc. in its Q3 2021 investor letter:

MSCI (MSCI – up 14.36%) – We discussed this investment last quarter as well. In addition to a strong reported earnings quarter, MSCI also announced the acquisition of Real Capital Analytics (RCA), a commercial real estate and analytics provider. RCA aggregates transaction data to provide insights and analysis on market pricing and investment trends. Combined with offerings from their strategic partner Burgiss, the acquisition will allow MSCI to provide data and insights on commercial real estate, market activity, performance and risk. The acquisition will expand the suite of data products and analytic solutions MSCI can provide to its over 7,500 clients in 85 countries. In conjunction with the acquisition, MSCI raised $700M in a senior note offering to refinance their existing debt.”


Based on our calculations, MSCI Inc. (NYSE: MSCI) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MSCI was in 37 hedge fund portfolios at the end of the first half of 2021, compared to 38 funds in the previous quarter. MSCI Inc. (NYSE: MSCI) delivered an 8.23% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.

Disclosure: None. This article is originally published at Insider Monkey.