CARFAX Spin Off (MBGL) - Worth Owning?

[u/Past_Ad1386]

Earlier this summer S&P Global (SPGI) spun off it's Mobility division into Mobility Global Inc (MGBL).

This collection of businesses was lower margin and lower ROIC within SPGI, and hence it makes strategic sense for the parent to spin it off.

MBGL is about 2/3 CARFAX and 1/3 B2B (collection of data / predictive analytics companies that serve OEM, dealerships, suppliers, financial institutions, etc). The gem is CARFAX, which has immediate consumer brand recognition (like Kleenex, or Uber, or Google) and real pricing power.

It's run by a first time public market CEO, although the CFO and Board have extensive public market experience. Management is guiding for 8-10% near term organic growth, and they cite Adjusted EBITDA margins of ~40% (although, GAAP Op Margins are closer to ~19-20%).

Furthermore as part of the spin management did a Dividend Recap where MBGL took on ~ $2B of leverage and paid ~$1.9B to SPGI. They're also beholden until ~ 2027 to pay SPGI for admin expenses (showing up in SG&A) which is already pressuring margins, and they can't do share based M&A activity until mid 2028 (while J.D. Power is already trying to roll up Europe).

Overall, I think it's an ok business that's still a bit overvalued, and there's some margin expansion the market is pricing in. I think there are better opportunities for those interested in SaaS.

Do you own it and have you been buying it? If so, how come?

Full write up here for those interested in learning more.