SilverLake axis
I am currently reviewing Silver-lake axis Annual report.
1) Reading through the annual report made me feel the depth of my ignorance. I may have used the OCBC bank's SIBS system in the past and I can hardly differentiate it from the other 2 banks I have worked in. I don't feel that the SIBS banking systems is superior / inferior to the home-made systems used by the 2 MNC banks. This may mean either SIBS is overhyped, or SIBS is so good to the point that they can compete with the best banking systems! But I admit that creation of a mainframe system is a very expensive and complex process requiring great minds to make it work intuitively for users as well as to fit the complexity of all the banking processes. Silver Lake Axis has significant economic moats. I read the annual report once and I barely understood it.
2) Operating from my circle of competence, the direction of the banking sector is to move towards a system integrated with blockchain / STP / Internet / SWIFT linked systems. I still do not understand if Silver Lake has such a system and if the vendors / banks are devising a way to ditch or work with Silver-lake Axis on this. I need far more time to read through the annual report before making any decision as a IT system company is incredibly complex. Also, even if they wish to implement a new system, time tested system and familiarity of the workers to legacy systems will prove to be a major hurdle that is hard to overcome. The new fin-tech systems may not be a sufficiently good substitute for the time tested robust systems of Silver-lake Axis and there is no guarantee whether the new systems will be implemented or abandoned eventually due to compatibility issues.
3) Short sellers are scary. I have finished watching The Big Short (More for entertainment purposes than research purposes). There are capital rich hedge funds and banks preying on the ignorance of the others and making big bets that can massively swing the stock market in legal but unethical ways. They are self interested hypocrites whom espouse of the importance of revealing the truth but essentially using information to rig the markets in their favour. The scary part is even if they are right, they cannot predict when will the market will actually price in the news. And when it does, it has the force of a tidal wave and share prices and companies get destroyed in days. This has already happened for Silver Lake Axis. I have no way of verifying whether the accusations by the razor guy is authenticated but the auditor's view is Silver-lake is not illegally doing anything. Whether is it a true and fair opinion, a Enron-Arthur Anderson example, failing to spot the covered up tracks, or the company is truly innocent, is up to subjective opinion.
4) Finally, 5.39 PE ratio, and no debt. fantastic profit margin, vendor stickiness is truly a incredible company. Still considerable risks are present in a technology and fin-tech company.
Compared with Singapore's technology companies, it has a considerably stronger operating history than its competitors. In the Singapore technology index, although the technology index reported great growth, the constituents are all penny stocks! The fin-tech wave is merely driven by untested unproven stocks highly prone to speculation and market manipulation.
Nonetheless, even if I eventually make a buy decision, it will most likely be a FinTech market trend play and most likely the position size is close to $1000. (Side bet criteria). Average up / down, only time will tell.
5) Additional Research
http://sgyounginvestor.blogspot.sg/search/label/Equity%20Research%20Report%20-%20Silverlake%20Axis
To be expanded
1) Reading through the annual report made me feel the depth of my ignorance. I may have used the OCBC bank's SIBS system in the past and I can hardly differentiate it from the other 2 banks I have worked in. I don't feel that the SIBS banking systems is superior / inferior to the home-made systems used by the 2 MNC banks. This may mean either SIBS is overhyped, or SIBS is so good to the point that they can compete with the best banking systems! But I admit that creation of a mainframe system is a very expensive and complex process requiring great minds to make it work intuitively for users as well as to fit the complexity of all the banking processes. Silver Lake Axis has significant economic moats. I read the annual report once and I barely understood it.
2) Operating from my circle of competence, the direction of the banking sector is to move towards a system integrated with blockchain / STP / Internet / SWIFT linked systems. I still do not understand if Silver Lake has such a system and if the vendors / banks are devising a way to ditch or work with Silver-lake Axis on this. I need far more time to read through the annual report before making any decision as a IT system company is incredibly complex. Also, even if they wish to implement a new system, time tested system and familiarity of the workers to legacy systems will prove to be a major hurdle that is hard to overcome. The new fin-tech systems may not be a sufficiently good substitute for the time tested robust systems of Silver-lake Axis and there is no guarantee whether the new systems will be implemented or abandoned eventually due to compatibility issues.
3) Short sellers are scary. I have finished watching The Big Short (More for entertainment purposes than research purposes). There are capital rich hedge funds and banks preying on the ignorance of the others and making big bets that can massively swing the stock market in legal but unethical ways. They are self interested hypocrites whom espouse of the importance of revealing the truth but essentially using information to rig the markets in their favour. The scary part is even if they are right, they cannot predict when will the market will actually price in the news. And when it does, it has the force of a tidal wave and share prices and companies get destroyed in days. This has already happened for Silver Lake Axis. I have no way of verifying whether the accusations by the razor guy is authenticated but the auditor's view is Silver-lake is not illegally doing anything. Whether is it a true and fair opinion, a Enron-Arthur Anderson example, failing to spot the covered up tracks, or the company is truly innocent, is up to subjective opinion.
4) Finally, 5.39 PE ratio, and no debt. fantastic profit margin, vendor stickiness is truly a incredible company. Still considerable risks are present in a technology and fin-tech company.
Compared with Singapore's technology companies, it has a considerably stronger operating history than its competitors. In the Singapore technology index, although the technology index reported great growth, the constituents are all penny stocks! The fin-tech wave is merely driven by untested unproven stocks highly prone to speculation and market manipulation.
Nonetheless, even if I eventually make a buy decision, it will most likely be a FinTech market trend play and most likely the position size is close to $1000. (Side bet criteria). Average up / down, only time will tell.
5) Additional Research
http://sgyounginvestor.blogspot.sg/search/label/Equity%20Research%20Report%20-%20Silverlake%20Axis
To be expanded
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