SS&C Technologies: Mission-Critical Services with Recurring Revenue

John Heldman and David Hutchison presented their in-depth investment thesis on SS&C Technologies (Nasdaq: SSNC) at Wide-Moat Investing Summit 2017.

SS&C is a leading provider of embedded, mission-critical accounting and reporting systems for both institutional investors as well as private client advisory firms, with leading offerings including Geneva, Axys, and Black Diamond. These platforms are entrenched in customer workflows and have high switching costs. It is also pursuing a roll-up of the fund administration services industry, where it has #2 overall market share with a continued runway of future acquisitions ahead. SS&C is #1 in the private equity fund administration segment. Founder and CEO Bill Stone maintains a 16% interest in the business he has grown since 1986. 93% of revenues are recurring in nature. Overlaying both businesses is a commitment to R&D spending (1,100+ R&D employees) to continue to offer best-in-class solutions as well as a focus on rational capital allocation. The company is paying down debt after acquisitions to free up capacity for additional M&A. As hedge funds have been in the news for outflows, John and Dave believe this has made the stock more attractive to buy, with the potential to reach $75 per share per their estimates over the next three to five years as organic and acquisition-driven revenues increase on a double-digit basis per year. John and Dave also see margins increasing moderately as the company realizes synergies in building increased scale in both businesses.

John Heldman brings about three decades of experience to the management of investment portfolios. Prior to founding Triad, he was a Senior Vice President and Portfolio Manager with Neuberger Berman. John has also managed investment portfolios for Deutsche Bank, Scudder Investments and Bank of America, including managing equity funds and serving on the Equity Strategy Committee. He obtained his Bachelor of Science degree in Finance and Master of Business Administration from California State University, Long Beach. John is a CFA charterholder, and a member of CFA Institute and CFA Society Orange County.

Dave Hutchison has two decades of experience in investment management. Prior to joining Triad, he served as Investment Strategist for Chamberlain Group, directing investment manager research. Dave also founded and managed Hutchison Capital, a registered investment advisor. He holds a Bachelor’s degree in Political Science from Macalester College and a Master of Business Administration from the University of Southern California’s Marshall School of Business. Dave is a CFA charterholder, and a member of CFA Institute and CFA Society Orange County.

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