Author: Dean Kim

Dean Kim is an Executive Director, Research Analyst for William O’Neil + Co.. Mr. Kim joined the firm to establish equity research coverage of the financial technology (“fintech”) sector. He has unique insight into the industry’s growth drivers, with broad experience covering the financial sector as an analyst and overhauling corporate business processes as a management consultant. Most recently, Mr. Kim served as Chief Financial Officer of Jios Aerogel Limited, a leading producer of the aerogel nanotechnology-based insulation material. As CFO, he raised more than $5 million in capital and managed liquidity, budgeting, and forecasting. Previously, he was an equity analyst for more than a decade. From 2007–2011, Mr. Kim headed equity research for BNP Paribas’ Korea office and simultaneously covered the banking sector, for which he was ranked number one by the Thomson Reuters/Joong-Ang Daily poll. He was also an equity analyst on Lehman Brothers' proprietary trading desk in Hong Kong, and on an Institutional Investor-ranked small cap team at UBS. Earlier in his career, Mr. Kim, an engineer, worked as a business process redesign specialist at Deloitte Consulting, analyzing the organization-wide processes of utilities and manufacturing companies. Mr. Kim earned a Bachelor’s degree in Electrical Engineering at Yale University, and an MBA from Columbia Business School. Outside of work, Mr. Kim enjoys coaching his kids’ soccer teams and traveling with his family.

Jack Henry (JKHY)

Posted on by Dean Kim

Financial services firm Jack Henry provides core bank processing through software as a solution (SaaS) or through outsourcing to mid-tier commercial banks, savings institutions, and credit unions. Jack Henry is a crucial piece of the puzzle for more than 12,000 financial institutions (

), as many of them now prefer to let a third-party provider manage the operation and maintenance of their core banking systems. Rapid changes in banking regulations and evolving customer preferences have forced

s to adapt quickly to new ways of doing business. Jack Henry’s products and services allow

s to respond swiftly to these market forces. This, in turn, generates 80% contractually recurring revenue, a relatively high EBITDA margin of 35%, and superior free cash flow (FCF) for Jack Henry. The Company also manages capital prudently and has very little debt. And although Jack Henry’s shares are trading at a premium over those of its peers, we believe the Company will continue to beat expectations. We initiate coverage of Jack Henry with an Overweight rating within our Fintech Ecosystem theme.

Fidelity National Information Services

Posted on by Dean Kim

Fidelity National Information Services, Inc. (

) provides a broad range of consulting services and outsourcing solutions related to banking, payments, capital markets, insurance, wealth management, and risk and compliance. Although its shares corrected in 2H15 after weaker-than-expected earnings results, we believe

now has an opportunity to present an earnings meet or beat. Factoring in its recent acquisition of SunGard Data Systems, current 2016 consensus estimates expect minimal organic growth for

and flat growth from SunGard. In the meantime,

shares are trading at a steep 35% discount to peers, which is not justified in our view. We are initiating coverage of

with an Outperform rating, under our Fintech Ecosystem theme.

Virtusa Corporation

Posted on by Dean Kim

Virtusa Corporation, an IT services consulting firm serving a
diverse array of industries, has proven its ability to execute business
by posting consistently strong double-digit growth in both topline
revenue and EPS. The Company’s strength lies in its high level
of recurring revenue as well as its specialization in growth service
areas, such as digital transformation and risk/regulatory management
for financial institutions, communications, and technology
companies.

Fiserv Drives ConsecutiveDouble-Digit Earnings Growth

Posted on by Dean Kim

Fiserv is a leading provider of account processing and payment
solutions to financial institutions (

), primarily in the U.S. More
than one in three

s relies on Fiserv for account processing solutions.
In 2014, Fiserv processed 25 billion transactions through 75 million
online banking users, 14 million mobile banking users, and 24 million
active bill payers, moving approximately $1 trillion in volume.
By providing mission-critical, non-discretionary services to clients,
with 86% contractually recurring revenue, Fiserv has posted an impressive
30 consecutive years of double-digit adjusted EPS growth.
More impressively, Fiserv has steadily improved adjusted operating
profit (OP) margin from 29.3% in 2011 to 31.7% in 2015 by driving
down costs and leveraging scale. The rise in OP margin contributed
to a rise in ROE from 20.4% to 26.8% during the same period. The
Company recently guided for 5% to 6% organic growth in 2016E
revenue and 12% to 15% in EPS growth. Looking to build on its powerful
growth formula, it has recently undertaken the acquisition
of Community Financial Services and launched several products
and services in the vital mobile, cloud, and real-time payments
processing space. We believe Fiserv is prepared to deliver continued
double-digit EPS growth in a secular growth industry and rate
it Outperform within our Fintech Ecosystem theme.

“Strategic M&A Makes SS&C anEmerging Leader in FundAdministration”

Posted on by Dean Kim

“SS&C Technologies Holdings, Inc is a leading provider of
mission-critical cloud-based software for financial services providers.
The Company provides a broad range of software-enabled
services, software as a service (SaaS), and consulting services to
multiple customer segments, including alternative asset management
(hedge funds and private equity), institutional and investment
management, wealth management, and other targeted
segments (e.g., property management, municipal finance, and
money markets).
SS&C’s key strengths lie in its ability to generate organic growth
of 5% to 10% annually, as well as to identify and successfully execute
strategic M&A that drives an additional 5% to 10% in annual
growth. The Company also excels at managing the EBITDA margins
of its M&A targets to align with SS&C’s target of 42%. We believe
SS&C’s combination of strong fundamentals, successful M&A
strategy, and group leadership make it an excellent fit with the William
O’Neil + Co. methodology (see sidebar). As a standout in our
Fintech Ecosystem theme, we rate SS&C’s shares as Outperform.”

“Consistently Strong Growth LiftsCognizant Above Its Competitors”

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“Cognizant Technology Solutions Corp. —a global provider
of IT applications development, consulting, and outsourcing—
stands out in our view as a potential market leader within our Fintech
Ecosystem theme. The Company has a clear strategic business
direction and proven execution capability, demonstrated by
continuous sequential growth in revenue (22% 5-year CAGR) and
earnings (19% 5-year CAGR). It has also consistently delivered high
operating margins (19% to 20%) and ROE (25% 5-year average).
The majority of Cognizant’s revenues come from financial services
and health care—two fast-growing sectors that are evolving rapidly
toward electronic and mobile delivery of services. Based on
our stringent O’Neil Methodology, we view Cognizant as a highpotential
stock and rate it as Outperform.”

Fintech Ecosystem Pervasive andGrowing Within Financial Services

Posted on by Dean Kim

Financial technology, or fintech, companies are constantly enhancing
the customer experience related to financial transactions,
whether purchasing online, checking bank balances, or
transferring funds through a mobile banking app. Apart from providing
ease-of-use, fintech companies also help to ensure transactions
are performed securely and seamlessly by facilitating various
hand-offs within the complex web of merchants, network clearing
systems, and counterparty banks.