Investment opportunities in existing providers of online infrastructure for financial applications.
Data mining is transforming today’s world: the design of business models, the way companies communicate, and how we consume services and products. Building the right infrastructure to support the rapid growth of digitalization in the financial industry is only viable, provided the necessary infrastructure is made available by other industry sectors.
Much of today’s digital technologies for financial institutions are provided by a few key providers. The impact of digital flows will increase tremendously over the coming years. Identifying, understanding, and exploiting the patterns of calls for resources, for talent, and infrastructure will help one make astute investments. Given the combination of resource, talent and infrastructure requirements, high level developments can only take place in a limited number of places around the world.
The interconnectedness will create new layers of requirements for enhancers, providers and users – in other words, the reliance on common infrastructure will materially create one new world.
Although the digitalized world is undoubtedly creating new opportunities for providers, this is not without costs and risks. R&D is important, but could be compared to product developments that never get to market. Those who spot new opportunities will need to move quickly to realize significant economic rewards.
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| SAP | SAPG | Germany | 14 % | 7.04 |
| Investment case: SAP is engaged in selling licenses for software solutions and related support services. While SAP is not directly a provider to the financial sector, we believe that the company could be tempted to focus more on this sector if its unable to realize its potential in the cloud computing markets | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Oracle | ORCL | United States of America | 16 % | 6.43 |
| Investment case: Oracle sells a wide range of enterprise IT solutions, including databases, middleware, applications and hardware. Software licenses and product support are the most profitable segments of the company. An active acquisition program is a fundamental component of the company’s overall strategy, which it could deploy on a player in the financial industry. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Temenos | TEMN | Switzerland | 24 % | 4.79 |
| Investment case: Temenos Group AG provides banking software systems to retail, corporate, universal, private, Islamic and microfinance, and community banks. The company, directly through the business it undertakes, is directly exposed to a new paradigmand therefore needs to provide its clients with the appropriate solutions.. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Reuters | TRI | Canada | -2 % | 6.49 |
| Investment case:Thomson Reuters Corp provides information for businesses and professionals, in particular to the financial industry. The company allows market participants to connect, access market-leading content, and trade in a secure environment. An increasing level of digitalization by smaller users will challenge the company’s business model which has focused on mainly on major operators. | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| Microsoft | MSFT | United States of America | 13 % | 5.29 |
| Investment case: Microsoft develops and sells software, hardware, and services. Covering commercial customers is the largest component of its activities. Most financial institutions rely almost fully on Microsoft’s services and products. Digitalized operations will require operating systems with higher performance opportunities. 64-bit operating systems are still not common, and therefore as performance demands increase, the requirement for OS upgrades bodes well for the company | ||||
| Company | Ticker | Country | Upside Potential | Sharpe (FY01) |
| EMC | EMC | United States of America | 11 % | 6.15 |
| Investment case: EMC is a leading provider of hardware, software, and services for enterprise network storage. Historically focused on proprietary storage hardware, the company has recently increased its focus on its software and services segments. Digitalized operations will require operating systems with higher storage capacities. The financial industry is keen to get the latest technologies installed and therefore EMC’s strategy to expand into the solid-state drive (SSD) sector should open new growth avenues for the company. | ||||