Avram Fisher of Long Cast Investment Advisors presented his in-depth investment thesis on Intelligent Systems (US: INS) at Best Ideas 2019.
Intelligent Systems is a micro-cap company ($120 million market cap, $100 million EV) that traditionally licenses card issuer processing software and is on the verge of selling its largest license to date (to an undisclosed customer, but “scuttlebutt” is Goldman Sachs / Marcus).
Concurrently, the company is moving into the processing-as-a-service side of the business, which has substantially higher recurring revenue and incremental margin component, and where it has been gaining traction.
Revenue doubled from 2015 to 2016 on the processing business and will double again from 2017 to 2018 to $20 million on processing + customization around the pending license sale. Management is guiding to continued growth next year as it expects to book the license and backfill that with continued growth in processing revenue. The company has a history as a “holdco” but is down to one operating segment. The founder and long-time CEO owns 25% of the stock.
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About the instructor:
Avram Fisher is the portfolio manager and founder of Long Cast Advisers. Previously, he worked for 12 years in institutional equity research (Private Equity, CSFB and BMO Capital Markets) covering the technology, consumer goods, business services, and industrial goods and services sectors. Avi began investing in the mid-1990’s, working as a reporter by day and researching stocks at night, applying the same reporter’s due diligence, creativity and commitment to integrity to his burgeoning interest in investing. This led to a career transition from the news room to investment banking, with the idea that he would eventually help manage wealth for himself and clients. Long Cast is the culmination of that vision. Given Avi’s unusual background (which includes work as a private investigator, in corporate governance research, and an MBA) as well as his 20 years of experience as a private investor, he knows he’s not smarter than the market. Instead, he realizes that patience, fundamental research, and imagination are the key ingredients to investing towards results that are apart from the overall market.