Fiserv Inc.

The views expressed below are those of Anchor Capital Advisors, LLC (“Anchor”) as of the date written and are subject to change at any time. They are based on our proprietary research of the stated company and the following is a summary of the primary factors that support our beliefs and rationale for investing in the company. Please see additional disclosures at the end of this publication.

FISV: NASDAQ

Fiserv Inc. engages in the provision of financial technology, accomplishing mission critical tasks for financial institutions.[1] The company recently merged with First Data, which sits at the center of global electronic commerce, with a focus on point of sale (POS).[2] First Data is the second largest merchant acquirer and processor in the United States, behind only Chase.[3]

Investment thesis

We believe Fiserv has sticky contracts which lead to revenue visibility, and is positioned for secular trends. Both Fiserv and First Data on their own have strong organic growth; together, we believe there are clear cost synergies that are not being valued by the market. To us there is a clear path to double digit earnings growth over the next 5 years.

Confirmation through research

Fiserv has strong revenue visibility thanks to 95% plus customer retention and 90% plus recurring revenue.[4] They benefit from clear secular trends, as 91% of financial institutions are expected to increase spend in their core categories.[5] Fiserv re-affirmed guidance at 4.5% to 5.0% and First Data at 4% to 6%.[6] The combined company is expecting $900 million in cost synergies per year.[7] We see an easy path to 15% earnings per share growth per year for the next 5 years,[8] just from synergies and 100% free cash flow conversion from earnings.[9]

Variant Perception

We don’t believe the market is assigning fair value to what we believe is a high quality business. We see large cost synergies due to its recent merger with First Data and the company’s organic growth, free cash flow conversion, and path to 15% earnings per share growth per year for the next 5 years.