IHS Markit (now part of S&P Global)

• The Bottom Line: IHS Markit is a vast library of critical economic and financial data; for a value investor, it's the intelligence agency that provides the facts needed to separate durable businesses from market noise.
• Key Takeaways:
• What it is: A global information powerhouse, now part of sp_global, that provides essential data, analytics, and insights across major industries like finance, energy, and automotive.
• Why it matters: It supplies the raw materials—from credit risk indicators to industry forecasts—that are indispensable for conducting deep due_diligence and accurately calculating a company's intrinsic_value.
• How to use it: Investors use its data (often indirectly through news and broker reports) to assess industry health, gauge economic trends, and understand a company's specific financial risks before making an investment.

Imagine you're a home buyer. You wouldn't purchase a house just because the front lawn looks nice. You'd hire a professional home inspector to check the foundation, the plumbing, the wiring, and the roof. You'd want an expert appraisal, a report on the neighborhood's long-term prospects, and data on comparable sales. You want the unvarnished facts to ensure you're paying a fair price for a solid structure. In the world of investing, IHS Markit is that master home inspector, appraiser, and neighborhood analyst, all rolled into one. It doesn't tell you which company to buy. Instead, it provides the vast, often complex, and mission-critical data that allows serious investors to make their own informed decisions. It operates behind the scenes, providing the plumbing, wiring, and foundational data that the entire global financial system runs on. Historically, IHS Markit was formed by the 2016 merger of two data giants:

• IHS (Information Handling Services): A company with deep roots in providing technical and operational data, particularly for the energy and transportation sectors. Think of them as the experts on physical assets and supply chains.
• Markit: A financial services specialist famous for compiling and selling financial data, most notably the pricing for opaque assets like Credit Default Swaps (CDS) and bonds. They were the experts on financial risk.

The combined entity became a one-stop-shop for information, covering everything from the number of cars sold in Germany last month to the perceived credit risk of a Brazilian mining company. In 2022, this data empire was acquired by S&P Global in a landmark deal, creating one of the largest and most powerful financial data providers on the planet. Their most famous products include the Purchasing Managers' Index (PMI), a critical monthly survey that acts as a real-time health check for an economy's manufacturing and services sectors. When you hear a news anchor say, “The latest PMI data shows the economy is expanding,” that information almost certainly originated from the surveys conducted by S&P Global, using the methodology developed by Markit.

“The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.” - Vince Lombardi ¹⁾

For a value investor, who follows in the footsteps of Benjamin Graham and Warren Buffett, IHS Markit and its parent S&P Global are significant in two distinct ways: first, as a powerful tool for analysis, and second, as a prime example of a high-quality business to analyze. 1. Fuel for Fundamental Analysis: Value investing is built on a foundation of deep research, not speculation. It's about understanding a business inside and out. The data from IHS Markit is the high-octane fuel for this analytical engine.

• Calculating Intrinsic Value: You cannot determine what a business is truly worth (intrinsic_value) by looking at its stock price alone. You need to understand its industry's growth prospects, its position relative to competitors, and the macroeconomic headwinds or tailwinds it faces. IHS Markit's industry reports and economic forecasts (like the PMI) provide the context necessary for building a realistic discounted cash flow model.
• Defining the Margin of Safety: A core tenet of value investing is buying a security for significantly less than its intrinsic value. This gap is the margin of safety. Data on credit risk, such as CDS spreads, provides a market-based view of a company's financial fragility. A widening CDS spread could signal increasing risk, prompting a value investor to demand an even larger margin of safety, or to avoid the investment altogether until the risk subsides.
• Understanding the “Business” You Own: Warren Buffett advises to “buy a business, not a stock.” IHS Markit's detailed supply chain and industry data allows an investor to go beyond the financial statements and understand how the business actually operates—its dependencies, its key markets, and its operational risks.

2. An Exemplar of an Economic Moat: A value investor is always searching for companies with durable competitive advantages, or “moats.” Financial data providers like S&P Global (including the former IHS Markit) are classic examples of businesses with wide moats.

• High Switching Costs: Their data and platforms are deeply integrated into the daily workflows of banks, asset managers, and corporations worldwide. Ripping out this data infrastructure and replacing it with a competitor's would be enormously expensive, time-consuming, and risky.
• Intangible Assets & Network Effects: Their datasets (like PMI or CDS pricing) are industry benchmarks. The more people use and trust the data, the more valuable it becomes, creating a powerful network effect that locks out competitors.
• Pricing Power: Because their services are essential and hard to replace, they have significant power to raise prices over time, a hallmark of a fantastic business.

Studying how IHS Markit's data is used helps you become a better investor. Studying IHS Markit's business model helps you identify what a great investment looks like.

While direct, professional-grade access to the full suite of IHS Markit (now S&P Global) tools is prohibitively expensive for most retail investors, its influence and data are everywhere. A savvy investor can learn to read the “footprints” of this data in publicly available sources to make better decisions.

Here is a step-by-step process for leveraging this type of institutional-grade data in your own investment research:

1. 1. Start with the Macro View (The Economic Weather): Before analyzing a specific company, understand the environment it operates in.
   • Action: Pay close attention to monthly releases of the S&P Global PMI data. You can find summaries and analysis for free on major financial news sites (Bloomberg, Reuters, Wall Street Journal).
   • Question to Ask: Is the economy expanding (PMI > 50) or contracting (PMI < 50)? Is the trend improving or worsening? This tells you if the wind is at your target company's back or in its face.
2. 2. Drill Down to the Industry Level (The Local Climate): Next, understand the specific dynamics of the company's sector.
   • Action: Look for news articles, industry publications, or even company investor presentations that cite IHS Markit or S&P Global data. For example, if you are analyzing a car company, search for “IHS Markit automotive forecast.”
   • Question to Ask: Is the industry expected to grow or shrink? What are the key disruptive trends (e.g., electric vehicle adoption) that experts are tracking?
3. 3. Assess Company-Specific Risk (Checking the Foundation): Finally, zoom in on the company itself.
   • Action: While direct CDS data is for professionals, you can find proxies. Look at the yield on the company's bonds (available on many financial websites). A rising yield relative to government bonds signals that the credit market sees increasing risk. News reports will often cite Markit iTraxx or CDX indices, which measure credit risk for baskets of European and North American companies, respectively.
   • Question to Ask: Is the credit market more or less worried about this company's ability to pay its debts than it was six months ago? This provides a crucial, forward-looking complement to the backward-looking debt_to_equity_ratio on the balance sheet.

The goal is not to find a magic number, but to build a mosaic of information. If the PMI is falling, industry forecasts are weak, and the company's bond yields are rising, it strongly suggests that a stock with a low price_to_earnings_ratio might not be a bargain, but rather a value_trap. Conversely, if your independent research shows a company is strong, but macro fears (reflected in PMI and credit data) have beaten down its stock price unfairly, you may have found a genuine opportunity with a significant margin_of_safety. The data provides the context; your judgment provides the decision.

Let's imagine an investor, Ben, is considering an investment in “Durable Steel Corp.” in early 2023.

• Surface-Level Analysis: Ben sees that Durable Steel's stock is down 40% from its high. It trades at only 6 times earnings and pays a 5% dividend. On paper, it looks like a classic value play.
• Analysis Using IHS Markit / S&P Global Data Footprints: Ben decides to dig deeper.

1. Macro View: He reads a financial news report summarizing the latest S&P Global Manufacturing PMI for the United States. The headline is “PMI Indicates Deepest Manufacturing Contraction in Two Years.” The report quotes experts who are concerned about falling new orders and rising inventory levels—a bad combination for a steel company.
2. Industry View: Ben does a quick search and finds an article citing an S&P Global commodity analyst who forecasts a 15% drop in steel prices over the next year due to slowing construction in China and a global economic slowdown.
3. Company Risk: Ben checks the bond yields for Durable Steel Corp. He finds that the yield on its 10-year bonds has jumped from 4% to 8% in the past six months, even as government bond yields rose more slowly. The market is clearly demanding a higher return to compensate for what it perceives as higher risk.

• Conclusion: The institutional data paints a much bleaker picture than the simple P/E ratio. The economy is contracting, the price of the company's core product is expected to fall, and the credit market is nervous. Ben concludes that Durable Steel is likely not a bargain but a business heading into a severe cyclical downturn. He has avoided a potential value_trap by using data to understand the business reality, not just the stock market story.

• Comprehensiveness: The sheer breadth and depth of the data, from financial markets to physical supply chains, is unmatched. It provides a holistic view of the global economy.
• Authority and Trust: Its key metrics, especially the PMI, are considered benchmark indicators by central banks, governments, and institutional investors. The data is trusted and market-moving.
• Forward-Looking Elements: Unlike financial statements which report on the past, many of its products, like forecasts and real-time risk indicators, are designed to help investors anticipate future trends.

• Cost and Accessibility: The primary weakness for individual investors is the high cost of direct access. Most must rely on second-hand summaries, which may lack crucial nuance or be framed with a specific media bias.
• Information Overload: Even if you had access, the sheer volume of data can be overwhelming. It's easy to fall into “analysis paralysis” or to find data points that confirm any pre-existing bias. Data is a tool for thinking, not a substitute for it.
• Forecasts are Not Destiny: Economic and industry forecasts are educated guesses, not certainties. They are based on models that can be upended by unexpected events (a “black swan”). A wise investor uses forecasts as one input among many and maintains a healthy dose of skepticism.

• sp_global
• moodys
• economic_moat
• due_diligence
• credit_default_swap
• purchasing_managers_index_pmi
• value_trap