On the first of December, Lance Uggla signed a contract to sell his London based company IHS Markit to S&P Global Inc. S&P stands for Standard and Poor and they provide financial data from credit ratings to market indexes. Mr. Uggla started his company to provide mark to market data for exotic fixed income products including credit default swaps.
If you watch TV and movies about Wall Street you see traders looking at screens and doing trading, the issue is who provides that data? S&P Global and Markit provide the data and equally important every time the screen is turned, there are recurring nature to the revenues.
The nature of providing data is to have recurring revenues a company needs scale or to get bigger because there are cost savings on IT infrastructure and as a company gets bigger, it can sell other products or bundles to the users. The more people trade, they need a platform which has data and then you go from there.
Linking to dividend paying stocks, companies that have recurring income are very good to own, every industry has the companies that provide the data or tools for the industry to function. Many people look at the providers of the function, but what tools or data are they using? Then it is possible to be in the industry, earning profits and at the end of the year – knowing you had a good one.
There are more questions than answers, till the next time – to raising questions.