We appreciate the logistical hoops public companies are having to work through to prep for earnings calls given disparate locations and other pressing operational matters. The cherry on top is when companies take extra care to have an adult conversation with investors about the state of operations despite the limited visibility that 99% of companies have. There are a few examples, perhaps none better than SS&C Technologies (tkr: SSNC).
Institutional investors are financial partners and deserve a baseline level of transparency from public company management teams. We are not suggesting that management teams share their internal op reviews and budgets with investors, but a high-level sensitivity analysis that frames best, worst and mid-case scenarios is extremely helpful. Rather than describe with words we point you to SS&C’s scenario analysis published as part of last evening’s earnings call (see slides 4 and 5 HERE). This is a great example for other public companies to follow.
We are also fans of companies that play offense during a difficult economy rather than failing to act. SS&C checks the box here as well. While moving approximately 22,500 employees to a work from home environment within two weeks, SS&C managed to integrate one acquisition (Algorithmics, more on that) and execute several others including Captricity with its AI/OCR-powered Vidado product, CLPSI and its BPM offering that serves life insurers (announced April 21st) and Innovest which was announced yesterday.
Algorithmics’ risk management offering provides SS&C with a larger footprint in the front office. We recall Algorithmics from years past when it competed against Barra and Risk Metrics when all were standalone companies. We recently had the opportunity to demo Algorithmics as part of SS&C’s Singularity offering. It is intuitive and rich with data which enables risk managers, credit analysts, quant analysts and the like to get creative in modeling various “what if” portfolio scenarios.
Outsourcing – taking a page out of Amazon’s book with AWS. In the early days of AWS small firms like ours built their entire platform on top of AWS (still true today for many startups). Many large enterprises first dipped their toe into the AWS waters by using AWS to cost-effectively add remote server capacity as needed. We expect investment managers to do the same with SS&C coming out of this COVID crisis. Investment managers that experienced operational hiccups with their own processes and were forced to call on SS&C’s Outsourcing capability to meet service delivery requirements are prime candidates to explore an Outsourcing relationship with SS&C, if for no other reason than as a risk mitigation strategy. More to come on the Outsourcing theme as we plan to host a podcast episode on the subject in May.