Helping Investors Place Big Orders
03/18/2009 10:41 am EST
John Snowden, editor of the IRS Report, finds a technology company whose products help institutional investors manage their operations more efficiently.
Fidessa Group plc (LSE: FDSA.L) has risen to become one of the most respected technology firms in providing investment processing systems to institutional investors.
At the heart of the Fidessa platform are powerful solutions for order management and position keeping. Flexible systems allow for optimal electronic communication. Orders are automatically assigned to a market-sensitive smart router. This instrument will provide a "no touch" best-execution solution for retail orders.
The same solution can be applied for institutional and program business. In fact, Fidessa offers a fully integrated solution for managing institutional orders from origination to allocation.
There is no conflict of interest in this process as the company is a truly independent vendor with a huge and ever-expanding network of connections to electronic order sources with built-in support for IOIs (Indications of Interest), advertisements, confirmations and allocation; in other words, a complete solution for institutional business.
Fidessa also provides systems to consolidate trade and order data as well as identify high-risk orders that can be dealt with more quickly or enable them to be manually handled. This is especially useful for high-volume business and program trading. Fidessa's software is currently used by investment institutions in Europe to trade all the major European markets from a single system.
The same systems are applied to the Japanese and Asian markets providing a single interface on a trader's desktop of a "virtual" Asian market. The system gives support for specific order types such as concealed or enhanced limit orders or specific trading practices.
The financial track record is impressive with turnover (revenues) and pretax profit rising steadily from the end of December 2004 (sales of £59.77 million and pretax profits of £9.80 million) to December 2007 (sales of £135.03 million and pre-tax profits of £17.07 million) and most recently £189.10 million turnover and pretax profit of £22.9 million, a 34% rise on last year. As for the future, growth seems relatively unaffected by the current global economic slowdown as the company has signed up more than 130 new customers.
Fidessa is projecting turnover to increase to £213.6 million [this] year, with a further rise to £229.9 million in 2010. Pre-tax profits are forecast to rise to £27.60 million [in 2009] and to £29.88 million in 2010.
There are three other compelling reasons for buying a half unit of investment now. Firstly, the shares go ex-dividend with a 17 pence final dividend on May 6th. Secondly, the company has no debt. Thirdly, at the year-end Fidessa had £33.1 million cash on deposit. (It closed at $822.50 Tuesday—Editor.)