Spruce Point issues cautious report on MSCI

Spruce Point issued a cautious report on MSCI, saying it obtained documents through Freedom of Information Act requests with California Public Employees’ Retirement System and the New York City Public Pension Fund, respectively the largest and fourth largest pension funds in the United States that spend millions on fees for MSCI’s services. Spruce Point says that the email correspondences between MSCI and CalPERS express concerns about price increases, detail exploration of reduction in usage, terminate certain products such as Barra Portfolio Manager, and provide “repeated examples of MSCI offering price concessions. These actions directly call into question MSCI’s repeated claims of pricing power and market share stability.” The firm reiterated its concerns with MSCI following its recent “disappointing” Q1 quarterly results and largely unchanged stock price and said it sees a “growing disconnect” between MSCI’s share price and growing fundamental strains.