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SS&C Technologies: Financial IT
05/08/2015 7:00 am EST
Our latest recommendation in the information technology sector boasts a highly visible revenue stream, tends to hold its value during periods of volatility, and offers exposure to several near- and intermediate-term upside drivers, explains Peter Staas, editor of Capitalist Times.
SS&C Technologies (SSNC) specializes in software solutions that enable its customers in the financial services industry to automate complex business processes, fulfill their information processing needs, and comply with an ever-growing book of regulations.
The company offers a wide range of software products and related services that address front-office functions such as trading and modeling, middle-office needs such as portfolio management and reporting, and back-office operations such as accounting and performance measurement.
At the end of 2014, the company’s more than 7,000 clients included banks, hedge funds, private-equity outfits, insurance companies, and real estate investment trusts (REIT). In aggregate, these customers manage more than $26 million in assets.
About 90% of SS&C Technologies’ revenue comes from contracts that usually renew like clockwork, a testament to the quality and mission-critical nature of the company’s software solutions.
SS&C Technologies should also benefit from growing demand for risk assessment and reporting tools to comply with new regulations and to meet investors’ expectations for transparency and mobile access to their accounts.
Mergers and acquisitions historically have been a big part of SS&C Technologies’ growth story.
Having digested the 2012 acquisitions of GlobeOP Financial Services (fund administration) and Thomson Reuters’ PORTIA business (portfolio management), SS&C Technologies went on acquisition spree in recent months.
First, the company acquired DST Global Solutions for $95 million, a deal that netted the company the HiPortfolio investment and fund accounting platform and the data management and analytics system, Anova.
SS&C Technologies also announced the $2.7 billion acquisition of Advent Software (ADVS), a rival software provider that serves more than 4,300 buy-side clients.
SS&C Technologies rates a buy up to $65 per share for growth investors looking to build wealth over the long haul.
Prospective investors should ease into this position, as the stock could pull back when the company announces the secondary equity offering to help fund the acquisition of Advent Software.
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