Yodlee exit from Daily Fintech Index at premium shows value investing not dead

By Bernard Lunn

News: Yodlee has been acquired by Envestnet.

We have covered Yodlee’s picks & shovels value proposition here.

Look at the Daily Fintech Index to see why sharp eyed bargain hunters cast their ruler over Yodlee:

  • $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.

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