On November 13, New York City-based Hyperion Capital Advisors disclosed a new position in Vertex (VERX 2.94%), acquiring 540,000 shares valued at approximately $13.39 million.
What Happened
According to a filing with the Securities and Exchange Commission dated November 13, Hyperion Capital Advisors established a new position in Vertex (VERX 2.94%). The fund acquired 540,000 shares, with the stake valued at $13.39 million as of September 30. The move brought the number of reportable positions in the portfolio to 62.
What Else to Know
This new position represents 7.16% of Hyperion Capital Advisors’ reported U.S. equity assets as of September 30.
Top holdings after the filing:
- NASDAQ: GOOGL: $35.93 million (19.2% of AUM)
- NYSE: ELV: $16.69 million (8.9% of AUM)
- NASDAQ: VERX: $13.39 million (7.2% of AUM)
- NYSE: ICE: $12.85 million (6.9% of AUM)
- NYSE: UNH: $12.44 million (6.7% of AUM)
As of Wednesday, shares of Vertex were priced at $20.03, down a staggering 63% over the past year and well underperforming the S&P 500, which is up about 15% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of Tuesday) | $20.03 |
| Market capitalization | $3.2 billion |
| Revenue (TTM) | $732.19 million |
| Net income (TTM) | ($53.58 million) |
Company Snapshot
- Vertex provides tax technology solutions, including tax determination, compliance and reporting, tax data management, document management, pre-built integration, and industry-specific software.
- The company generates revenue through software licenses, software as a service (SaaS) subscriptions, implementation and training services, and tax-related outsourcing services.
- It serves corporations across retail, communications, leasing, and manufacturing sectors in the United States and internationally.
Vertex is a leading provider of tax technology solutions, with a focus on automating complex tax compliance and reporting processes for large enterprises. The company leverages a mix of on-premise and cloud-based offerings to address diverse client needs and regulatory environments. Its strong presence across multiple industries and long-standing expertise position it as a trusted partner for corporate tax management.
Foolish Take
Vertex’s stock has been crushed since its late January peak, yet the underlying business is still growing at a double-digit clip and throwing off real cash. In the most recent quarter, revenue rose 12.7% year over year to $192.1 million, with cloud revenue up nearly 30%. Annual recurring revenue climbed to $648.2 million, and adjusted EBITDA expanded to $43.5 million, a 22.6% margin. That disconnect might be why Hyperion has stepped in here.net
The selloff appears perhaps driven more by decelerating net revenue retention and investor fatigue with midcap software generally than by a collapse in demand. Meanwhile, management had its own response: Vertex authorized its first-ever $150 million share repurchase program and ended the quarter with more than $313 million in cash, giving it flexibility many beaten-down software names lack. This position now sits alongside Alphabet, Elevance, ICE, and UnitedHealth in the portfolio, signaling a preference for durable cash-generating businesses rather than speculative growth.
Ultimately, for long-term investors, today’s Vertex valuation does seemingly signal that there’s room for patience to be rewarded.
Glossary
Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
13F reportable assets: U.S. equity securities that institutional investment managers must disclose quarterly to the SEC via Form 13F.
Net position change: The difference in the number or value of shares held in a security after a transaction.
Stake: The ownership interest or amount of shares held in a company by an investor or fund.
Position: The amount of a particular security or asset held by an investor or fund.
Portfolio: The collection of investments owned by an individual or institutional investor.
Filing: An official document submitted to a regulatory authority, such as the SEC, disclosing financial or investment information.
Market capitalization: The total value of a company's outstanding shares, calculated as share price times number of shares.
Implementation services: Assistance provided to help clients set up and integrate new software or technology solutions.
Software as a Service (SaaS): A software delivery model where applications are accessed online via subscription rather than installed locally.
Outsourcing services: Contracting external providers to perform business functions or processes that could be done in-house.
TTM: The 12-month period ending with the most recent quarterly report.
