Adam Zuercher of Hixon Zuercher Capital Management presented his in-depth investment thesis on Manhattan Associates (Nasdaq: MANH) at Wide-Moat Investing Summit 2018.
Thesis summary:
Manhattan Associates develops, sells, deploys, services and maintains software solutions designed to manage supply chains, inventory and omnichannel operations for retailers, wholesalers, manufacturers, logistics providers and other organizations. Customers include many of the world’s premier and most profitable brands.
MANH is a highly profitable company, consistently generating FCF equal to 20-25%+ of sales. The company has produced returns on invested capital 50+% greater than its cost of capital for the past two years – a strong combination of high ROIC and high FCF. The company is shifting from selling software licenses to a cloud-based software-as-a-service solution.
Adam believes the market is overlooking MANH’s value due to the recent revenue decline and slowdown in earnings growth. On the surface, it appears the company is in decline, but the real story is they are transitioning to a better economic model. Based on Adam’s projections, the company is modestly undervalued.
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About the instructor:
Adam Zuercher is co-founder, Chief Executive Officer, and Chief Investment Officer of Hixon Zuercher Capital Management. As Chief Investment Officer, he oversees investment research and the development and implementation of the firm’s investment strategies. Adam serves as a co-Portfolio Manager and as chairman of the firm’s Investment Committee. Adam is also a member of NAPFA. Adam has experience providing investment management and financial advisory services since 1999. Prior to co-founding Hixon Zuercher Capital Management in 2002, Adam worked at a CPA firm for three years specializing in financial planning and investment advisory services for high net worth individuals.
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