By Bernard Lunn
- $0.4bn market cap. This is far below the $2bn hurdle (below which you are in “small cap hell” ignored by most funds). This also makes it a nice “bite size” for a lot of PE funds.
- PSR lowest in Emergent Fintech. If you believe that Fintech services such as Personal Financial Management and Robo Advisers have a bright future, then an enabling technology such as Yodlee should do well.
Both of those scream “potential buying opportunity” to a sharp-eyed analyst.
Envestnet is also publicly traded (ENV). We missed them in our Index – have corrected that now. The market did not like the deal and marked ENV down sharply. I think it could be a good deal because it gets them closer to the $2bn market cap where they escape small cap hell.
Value investing now relies on M&A activity to get value realized. Without that M&A activity, value investing falls into the value trap (the stock just stays undervalued). No harm in that if retail investors can get in front of that M&A activity by doing some fundamental analysis.