Cooper Investors, an independently-owned investment firm, recently published its first-quarter Global Equities Fund (Hedged) commentary – a copy of which can be downloaded here. During the first quarter of 2020, the Cooper Investors Global Equities Fund (Hedged) returned -18.98%, while the benchmark MSCI ACWI was down 19.97%.
In the said letter, Cooper Investors highlighted a few stocks and Intuit Inc (NASDAQ:INTU) is one of them. Intuit is a financial software company based in California. Year-to-date, INTU stock gained 0.4% and on April 30th it had a closing price of $269.81. Its market cap is of $68.5 billion. Here is what Cooper Investors said:
“As an example Intuit is a long time Watchlist stock which was purchased after a 20% decline made it an underperformer since mid-2019. Founded by board member Scott Cook in 1983 Intuit is the leading player in accounting software for SMEs (Quickbooks) and tax filing software (TurboTax).
The business has a unique and rare mix of Growth and Stalwart characteristics with incumbent leadership positions in its key markets combined with growth opportunities. Intuit’s QuickBooks Online product, which can be thought of as the Xero of the US is the leader with 3 million subscribers in a market of ~40 million SMEs that still mostly use Excel and paper receipts as accounting records. We see a recurring revenue business growing its top line double digits with 33% operating profit margins.”
In Q4 2019, the number of bullish hedge fund positions on INTU stock decreased by about 2% from the previous quarter (see the chart here).
Cooper Investors comments on Synopsys
In the said letter, Cooper Investors also highlighted Synopsys Inc (NASDAQ:SNPS) stock. Synopsys offers electronic design automation software products used to design and test integrated circuits. Here is what Cooper Investors said:
“Synopsys was another technology addition and is one of the two dominant players providing software to the semiconductor industry. Founded by current co-CEO Aart de Geus in 1986, Synopsys has a history of creating value and growing with the client base, and importantly generating very attractive margins and free cash flow for shareholders. With the stock falling ~20% from highs, we saw an opportunity to pounce and buy an established technology company we have long admired.
As a vertical niche software provider Synopsys has deep domain expertise around what chip designers require to perform their roles. Its products are mission critical tools for the semiconductor industry as it continues to strive for greater speed and power efficiency in chips. This results in very sticky customer relationships, significant barriers to entry and attractive growth tailwinds.
Synopsys typically sells software on a subscription basis, serving as the R&D function of customers who are unlikely to cut product development even in hard times. We saw that in the 2018-19 down cycle, Synopsys is relatively insulated to these industry fluctuations.
We see value latencies around continued expansion of the suite of tools it provides its clients who increasingly want software solutions to streamline the design process. The company has also committed to significant margin expansion as some of their more recently developed tools reach critical scale.”
Disclosure: None. This article is originally published at Insider Monkey.
