Valens Equity Weekly Insights - 2023 02 21
SS&C Technologies (SSNC) has a dominant market position in the asset managementservice industry. As its clients keep growing AUM and SS&C continues to consolidate the
industry, SSNC's returns get structurally more robust. Uniform Accounting highlights that
the market is not pricing in any moat for SSNC, suggesting room for equity upside.
SSNC has rolled up several asset management service solutions to become the most
comprehensive offering in the industry. As its offerings become more complete, it's able to
become the whole back-office provider for the asset management industry. Through
consolidation, SSNC has managed to keep its Uniform ROA well above 50% while growing
substantially. And yet, the market is pricing the company for returns to fall to historically
low levels. As such, SSNC should be able to outperform the market's expectations.
Management confidence in the Q3 earnings call about improving pricing and revenue
growth suggest SSNC still has tailwinds and management is executing on the company's
ongoing strategy.
Akamai (AKAM) is being removed from the Conviction Long List. The company's legacy
delivery business has feen fading fast while it's focusing on growing its compute and
security businesses, and returns are still falling. We are closing down 31%.
SSNC
SS&C Technologies Holdings is a holding company. Through its subsidiaries, the company is a provider of software products and software-enabled services that allow financial services providers to automate business processes and manage their information processing requirements. The company provides its solutions to clients principally within the institutional asset and wealth management, alternative investment management, financial advisory and financial institutions vertical markets. In addition, the company's clients include commercial lenders, real estate investment trusts, corporate treasury groups, insurance and pension funds, municipal finance groups and real estate property managers.
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