{
  "docId": "019dd923-622c-750b-8b99-781d6376c0a8",
  "docSlug": "9250edf61831",
  "documentTitle": "MSCI Inc. (MSCI)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2024-01-17 00:00:00",
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  "pageNumber": 77,
  "pageCount": 123,
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  "density": "overcrowded",
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  "notes": "Uses red-line/strike-through visual style to highlight textual changes in corporate disclosure.",
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      "kind": "callout",
      "text": "Over $670 million of goodwill was generated from the RCA transaction. Spruce Point observes that MSCI recently changed its goodwill testing discussion to first insert a qualitative test before a quantitative approach. It struck out language referencing that the fair value “substantially exceeded” the carrying values.",
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      "kind": "callout",
      "text": "“Not more likely than not” Is this good English or confusing?",
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      "kind": "callout",
      "text": "Warning: Removed the word “Substantially Exceeded”",
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      "kind": "callout",
      "text": "Spruce Point observes that MSCI recently changed its goodwill testing discussion to first insert a qualitative test before a quantitative approach. It struck out language referencing that the fair value “substantially exceeded” the carrying values.",
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      "subkind": null,
      "toolName": "Visual emphasis",
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      "componentId": "019dd953-1ac4-74a6-be26-1f1fd1ec68f8",
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      "kind": "paragraph",
      "text": "Goodwill is recorded as a result of business combinations undertaken by the Company when the purchase price exceeds the fair value of the net tangible assets and separately identifiable intangible assets acquired. The Company testsWe test goodwill for impairment on an annual basis on July 1st and on an interim basis when certain events and circumstances exist. The test for impairment is performed at the reporting unit level. InWhen testing goodwill for impairment, the company usedwe first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test; however, on a periodic basis, we may elect to bypass the qualitative assessment and proceed directly to the quantitative test. When performing the quantitative test for impairment, we use the income approach to estimate the fair value of each reporting unit. Under the income approach, we estimate the fair value of each reporting unit based on the present value of estimated future cash flows. Estimating discounted future cash flows requires significant management judgment including in estimating forecasted future cash flows and determining both discount rates and terminal growth rates. Forecasted future cash flows are estimated based on a combination of historical experience and assumptions regarding the future growth and profitability of each reporting unit and terminal growth rates are selected based on consideration of growth rates used during the reporting unit's forecast period in combination with economic conditions. These assumptions require management's judgment and changes to these estimates or assumptions could materially affect the determination of the reporting unit's fair value. Any impairment is measured as the difference between the carrying amount and its fair value. Based on our quantitative assessment as of July 1, 2021, we determined that the estimated qualitative assessment for 2022, we determined that it was not more likely than not that the fair value of the Company'scompany's reporting units substantially exceededis less than their respective carrying values, sovalues and no impairment of goodwill wasimpairments were recorded.",
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      "kind": "paragraph",
      "text": "Goodwill Discussion Track Changes: 2021 vs. 2022",
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        "h": 0.03,
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      "kind": "source-note",
      "text": "Source: 2021 vs. 2022 10-K",
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      "kind": "title",
      "text": "Change of Goodwill Impairment Testing A Major Red Flag",
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      "name": "Cost Of Inaction",
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      "evidence": "The loop is implicit, as the document builds a case for selling MSCI shares.",
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      "description": "Quantify what happens if the audience does nothing"
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