SSNC

Publicly traded companies mentioned herein: SS&C Technologies Holdings Inc (SSNC)

Highlights

The presenter views SS&C Technologies (SSNC) as a “utility” for financial firms. He is long the stock at $49 and views the recent acquisition of DST as underappreciated by the Street. While he doesn’t normally like roll-up stories, SSNC has amassed a set of familiar assets. Most hedge funds use their, or similar software products for various back-office functions/record keeping. DST was a $5B deal done via mostly debt financing, and every time a deal gets done, despite Chairman & CEO Bill Stone’s team’s proven ability to buy and integrate businesses, “the sell side freaks out about leverage or some other issue (e.g., integration risk) and the stock muddles along.” Given the margin improvement seen with DST already, he is convinced that “everything will be fine” this time too. And, layering in Eze and Intralinks, which are not baked into most Street models yet, makes the story/timing even better. Looking to 2020, he forecasts $4.50 of EPS and $2B of EBITDA, both ahead of Street estimates, and at current multiples the upside in 12 - 18 months could conservatively be at least 35% (15x forward EPS, in 2019, would be $67.50). More likely, the presenter sees upside to $75 - $80, especially if fundamentals improve more rapidly than he expects and the trading multiples expand.