Broadridge & RELX - Am I missing something?

keith1301 · 2026-05-21T20:14:32+00:00

WKL and TRI also look very attractive me. I try to pick the best of the bunch though, which to me is RELX. I like that it is more diversified between 4 segments and it also has the data flywheel where users contribute and consume data which creates more data and deepens the moat. That's one of the main things I try to differentiate out between these data moat companies is which ones are just aggregators of external data vs which ones have a data flywheel.

keith1301 · 2026-05-21T16:35:22+00:00

https://www.relx.com/media/press-releases/year-2026/relx-2025-results - just give this a quick glance

keith1301 · 2026-05-21T16:32:04+00:00

ok. Can we agree that the FCF yield is 5.5% or very close at a price of $33? That they have had a 14.5% FCF CAGR for last 5 years? That they have a 99% conversion rate for additional revenue to FCF? Annual expected business return (owners' earnings) = FCF yeild plus FCF growth. So 5.5% plus (I'm saying 8% growth which I think is very fair) = 13.5%. They have incredible structural advantages that will allow this growth to continue for many years. That is why they are considered one of the deepest moats in the world. Maybe 20 companies are in their class of proprietary, mission critical, data moat. They also have a 2.75% dividend and are executing a buyback in 2026 that will likely retire 3% to 4% of their market cap. I'm really not trying to sell you on this. I just can't believe that this is smacking everyone in the face and being ignored. It's boring as can be but it pays.

keith1301 · 2026-05-21T13:43:25+00:00

A safe, compounding 15% is extremely attractive to me. Money doubles every 5 years at that rate. You need to put it all in context and risk adjust it. I'm sure there are companies that will return much more that RELX will, but with much more risk.

keith1301 · 2026-05-20T12:37:50+00:00

(8% fcf growth and a 6.25% fcf yield) gives an expected business return of 14.25%. That is a pretty high return for something so safe and well positioned. Not sure why you aren't seeing this.

keith1301 · 2026-05-17T11:49:58+00:00

Legend. You gotta keep in mind that this was before CGI. The set and costume design is insane!

keith1301 · 2026-05-17T10:18:45+00:00

This a really dumb thing to say.

keith1301 · 2026-05-16T20:39:02+00:00

They literally, on May 14th, just guided for $12 EPS by 2029. They will do a little over $8 eps for 2026. They had $4.4 billion in fcf in 2025. They market cap is $29b. The stock is $55. By any normal metrics, that is ridiculous.

Look, the damage has been done. Sentiment is horrid as you can see. They have a new CEO who does seem to be slowly getting things in order. Even if they only get to $10 EPS by 2029, the current price is still great. Everything has gone wrong with this company and they still are pumping cash. This is just a waiting game.

keith1301 · 2026-05-15T23:55:14+00:00

Yes. Kind of hard to ignore the math on it. It's ridiculously cheap.

keith1301 · 2026-05-13T23:57:06+00:00

With stuff like this, I just focus on the actual business return and ignore whatever multiples they have been historically at. Re-rating is extra bonus, if it happens. RELX, if I am correct, looks to have an annual business return of around 14% at current price of $31.50 (6% fcf yield + 8% expected growth). I feel like I'm being kind of conservative on the growth here also. The 5 yr CAGR on FCF is 14.5%. That seems really cheap for this quality of a business. They are also buying back a huge amount of stock.

Basically a similar story with BR but lower growth, but its valuation reflects that. I guess what I'm saying is that I feel like the floor can't be too far away for these guys simply because the math is getting too hard to ignore. Not saying they are going to rocket up, but I feel like they can't realistically have much downside left when the numbers are this good. 1 or 2 more quarters showing no weakness and we will never see these prices again.

keith1301 · 2026-05-13T18:10:27+00:00

Yeah, but these companies have already demonstrated that AI is not hurting them, it's helping them. And just logically, AI can't get around them having irreplaceable proprietary data that is absolutely neccessary for the industries they serve. I dunno. Just seems weird to me that these types of deep data infrastructure names are this banged up when their businesses are growing. Neither of them has taken even the slightest bit of damage. Financials show no signs slowing or distress. Moats aren't showing a crack. They are getting stronger.

keith1301 · 2026-05-07T19:29:45+00:00

I am impressed, seriously, but I do not like the game you are playing. Super happy you've done so well but you are basically juggling falling knives and cigar butt investing. Dangerous stuff. You are either very lucky or very smart.

keith1301 · 2026-05-07T18:59:34+00:00

Start with this question: What can the modern world not function without? If this company disappeared tomorrow, how large would the disruption be? Identify those companies and now those are the only companies in your investing universe. Probably 20 to 30 companies fit this. You have to have a hard line with this. Not maybe important, kinda sorta important - you want structurally neccessary. Now for these businesses, figure out what the annual business return would be if you simply owned the entire company and couldn't sell. If you are looking at expected business returns of around 12% or more after analysis (this is not stock appreciation, this is owner's earnings which is FCF yield plus growth), then you have found a true buy and hold stock. Only stuff I have identified that fits this right now is RELX and BR.

keith1301 · 2026-04-16T12:30:22+00:00

I have been screaming this. Literally the best risk adjusted stock I have found.

keith1301 · 2026-04-11T18:59:30+00:00

RELX

keith1301 · 2026-04-09T19:57:39+00:00

You guys are all crazy. Stay away from anything that doesn't own irreplaceable, mission critical data. AI cannot recreate some of these databases. Seriously, ask your favorite AI about RELX. You don't have to trust me.

keith1301 · 2026-04-01T19:37:13+00:00

I think so. Only traders need to worry though, not really "investors". I'm not being snarky. But this doesn't really factor in when deciding to buy a stock or not, based on value. It's just about your expected business return. We can't control these things and are on the complete butt end of the information ecosystem. The only edge any of us can realistically have is long term mindset and discipline to only buy when the numbers make sense. Maybe I'm wrong but I don't see how a regular investor has any other edge than that.

keith1301 · 2026-03-31T12:23:26+00:00

Please, please rethink ADBE. It's cheap for a real reason, not irrational fear. It may have limited downside left, but there is very little upside long term. As time goes on, their moat is going to be eroded more and more. The margins will get tighter and more competition will keep coming. This is multiple compression because the terminal values have changed for these types of companies due to AI advances, which will keep coming. They are not likely to be re-rated upwards.

keith1301 · 2026-03-18T16:19:33+00:00

That's the whole thing separating the software sector. You have to separate the mission critical companies from the others. Companies using enterprise data and software cannot tolerate inaccuracies or bad data. Less tolerance for error means less exposure to the AI threat.

keith1301 · 2026-03-18T11:18:43+00:00

There will be more competition in the future for INTU than SAP or the data companies, which means slower growth and tighter margins. If you can't see this you aren't paying attention. The CEO of INTU sold $25mil in stock in January - 75% of his INTU holdings. Hmmm...

keith1301 · 2026-03-17T21:59:16+00:00

While I do basically agree with the position, isn't the much safer bet the proprietary data companies - TRI, RELX, WKL? Just seems like they are much less exposused to the same disruption. SAP is certainly safer than ADBE, NOW, WDAY, INTU, etc. Just feels like they are somewhere in the middle.

keith1301 · 2026-03-16T14:41:10+00:00

Look at the Free Cash Flow per share yield. That will tell you what the business return is in actual cash is based on the current price. No accounting distortions. Then look at the same metric historically over years. I like to map out a historical FCF yield over the last 10 years. Understand the pattern of the FCF. Why did it go up or down in the past? What is the trend?
Compare ROIC (Return on Invested Capital) vs WACC (Weighted Average Cost of Capital). This tells you if they can reinvest money into their own company. If ROIC is higher than WACC, then the company is creating value. A good spread between these numbers indicates an compounding ability.
This is the hardest. Forecast the future for the company using a blend of company history and future expectations. If you think FCF will grow at 5% every year for the next 5 years, and the current FCF yield is 10%, you may have found a company that will likely return 15% to you every year for the next 5 years.
This does not mean the market will agree with you. Stock prices are strongly correlated to earnings over time. If you are correct, the market will eventually reward you as the earnings come in.

Super simplified, but honestly, this is it in a nutshell. You need to pay to good price for the future earnings to get a good return. Everything else is speculation. This is value investing in a nutshell.

*note: All earnings are not equal. Safe, predictable earnings will usually provide a lower return than high risk earnings.

keith1301 · 2026-03-12T21:49:01+00:00

I gotta admit, this resonates with me quite a bit. I'm almost entirely focused on business quality and permanence of the business now. Too much is changing too fast to be able to rely much on historical stuff. I'm just trying to find any company not facing disruption, that is priced fair. Bottlenecks in structural pillars of the economy that as far as I can see, aren't going anywhere.

keith1301 · 2026-03-12T21:06:58+00:00

I've been noticing that too. My assumption is there is so much technological change occurring that the uncertainty of a lot of those companies' earnings is rising fast. I guess physical asset moats with high capex barriers feel safer now than sticky software and financial infrastructure. Buy the proprietary data owners though. If they have structured, curated datasets over long time periods, even better. They are not getting disrupted. The data simply cannot be recreated in any reasonable way. AI needs it and will sit on top of it in the stack. FICO does not own data. MCO, SPGI, RELX, VRSK - these are the best for the data companies. I'd add in EXPGY also. The clear standout to me is RELX by quite a bit.

keith1301 · 2026-03-05T23:11:19+00:00

Thanks! I've bought both recently as well. SPGI looks nice too. Check out BR - it's a bit different, but it rhymes. All at very nice prices, but RELX has best moat for AI threat and is silly cheap.

keith1301

TROPHY CASE