Munger Mode rating: 2 out of 5 — Sell. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
Principal is a well-run, honestly managed, 145-year-old Des Moines financial institution doing everything right by the standards of its industry — and that is precisely the problem. It operates in businesses where doing everything right earns you a 15% return on equity and no pricing power whatsoever. Recordkeeping fees fall every year. Active asset management is bleeding assets — $11 billion of net outflows in the most recent quarter alone. Spread-based annuities are commodities priced against every other insurer's cost of capital. The moat here is a narrow one built on switching costs and small-business niche density, and it must be re-dug annually against fee compression. Management deserves genuine credit — the 2021–2022 portfolio pruning, the disciplined buybacks, the raised ROE targets — but a good jockey on an average horse still rides an average horse.
Recent filings analysed: 10-Q (2026-07-29), 8-K (2026-07-27), 8-K (2026-07-20), 8-K (2026-06-01).
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