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  • Why The McGraw-Hill Companies, Inc. Is A Buy Soon 1 comment
    Feb 7, 2013 1:33 PM

    The McGraw-Hill Companies, Inc. (NYSE:MHP), the parent company of Standard and Poor's is in hot water after the United States filed a lawsuit over the ratings on mortgage backed securities prior to and during the financial crisis. The amount of damages being sought in the lawsuit are said to be near $5 billion. The hype on Wall Street is saying, should MHP lose, they could be crippled as a company.

    There is no way in hell McGraw-Hill will ever go under based on this. First, settlements are always reached. The amount is usually somewhere in the middle, let's say $2.5 billion. In addition, the government would never cause a company that employs close to 25,000 people to go out of business. The PR disaster alone would be enough to let them have a payment plan over a decade.

    The stock has been crushed, falling from 52 week highs of $58.62 to its current level of $43.83. There is panic dumping here and somewhat justified as there will be a monetary penalty. However, with major support looming at $42.00, it is likely the drop will stall in the near term and maybe even see a great bounce.

    Gareth Soloway

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  • Deepv
    , contributor
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    As an ex-tobacco guy I can say that I am very skeptical that DOJ claim will lead to anything. It's a novel claim, similar to the "RICO" action against PM. Also, after so many years its clear that S&P/Moodys' are not going away like Einhorn and others said back in 2009. Not happening, and the structure of this action speaks to that. Finally this probably accelerates MHP split. BUy.
    7 Feb 2013, 02:46 PM Reply Like
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