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Company: Fisher Inc. (FISV)
Business: Fiserv provides payment technology and financial services worldwide. The company operates across the acceptance, fintech and payments segments. The Acceptance segment provides point-of-sale and digital commerce merchant acquisition services; mobile payment services; security and fraud protection products; Caret, an omnichannel commerce solution; and Clover POS, a cloud-based point of sale solution. This segment distributes through various channels including direct sales teams, strategic partnerships with agent sales forces, independent software vendors, financial institutions and other strategic partners. The fintech segment offers deposit and loan accounts to clients, as well as the management of the institution’s general ledger and central information files. The segment also offers digital banking, financial and risk management, treasury management, professional and advisory services, item processing and source capture, as well as other products and services. The payments segment offers card transactions, such as debit, credit and prepaid card processing and services; security and fraud protection products; card making; printing services; and various network services as well as digital cardless payment software and services, including bill payments, account-to-account transfers, person-to-person payments and electronic billing products. It serves businesses, banks, credit unions, other financial institutions, merchants and corporate clients.
share price: $ 78.1 billion ($ 117.94 per share)
Activist: Valueact Capital
Percentage of ownership: 1.60%
average cost: n / A
Activist comment: ValueAct has been a leading governance-focused investor for 20 years and, since 2017, has been led by Mason Morfitt as Chief Investment Officer. ValueAct has slightly expanded the activist playbook under Morfit, but it remains a major investor focused on governance, with its partners accounting for roughly half of the positions in the company’s core portfolio.
What is happening?
ValueAct Capital acquired Fiserv Inc. (FISV) for $ 1.2 billion (1.60%).
In the wings:
This investment in Fiserv is just in the right place of ValueAct – a technology company with good management, products and relationships that is somewhat misunderstood by the market. Some of ValueAct’s most profitable investments have been made in other poorly understood technology companies such as Microsoft, Seagate, and Adobe. For example, Microsoft and Seagate were both considered PC companies when they were actually cloud companies. The market now sees Fisher as an old tech company, when in reality it is a New World company.
Even as a traditional tech company, Fiserv is a decent company, growing at around 8% per year. But Fiserv transforms long before it is disrupted by smaller competitors, and it cares about its deeply integrated customers to improve its technology. Clover, the company’s intelligent point of sale terminal, is a perfect example. Clover came out a few years after Square, but Clover’s business is already larger with paid volume and growing faster than Square. Clover could be valued between $ 30 billion and $ 45 billion today, including debt on a stand-alone basis, and could be worth $ 185 billion by 2024.
But Clover is just an opportunity to change. The key here is for management to adapt to this transformation strategy and find other organic and strategic opportunities to pursue it. If the company fully embraces its growth, it should be able to achieve an annual growth rate of at least 15%. This change could increase the lifetime value of a company’s products by up to 60%.
To achieve this, the company has three main areas of intervention. First, invest to increase this rate of growth. Second, grow by acquiring and integrating other businesses like Clover. And third, simplify your strategy and the way it communicates with the market. The market needs to better understand the business and its opportunities.
Right now, the FISV is trading at a discount to the average S&P 500 company, even though its growth rate is higher than the average S&P 500 company, without attributing additional growth to Clover. ValueAct can be very helpful in helping management achieve this transformation, just as it has at Microsoft, Adobe and Seagate. As history has shown, they will have at least one committed and subsidiary shareholder and, if necessary, will bring value as a director to create shareholder value. They will certainly continue to engage with the company on a supportive basis as they get to know each other better and it will be amicable to support management if they take a seat on the board of. administration.
Ken Squire is the founder and chairman of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of 13D Activist Fund, a mutual fund that invests in the 13D activist investment portfolio. .