FIS: Seth Klarman's Bullish Case for This Cheap Value Stock

Fidelity National Information Services, Inc. (FIS) has caught the eye of renowned value investor Seth Klarman, who sees significant potential in this financial technology giant. Klarman's bullish stance on FIS is driven by several compelling factors that align with his investment philosophy. Let's delve into the reasons behind Klarman's optimism and explore whether FIS is indeed a cheap value stock worth considering.



1. Undervalued Stock Price: FIS's stock price is trading at a significant discount to its fair value, with a 33.8% undervalued intrinsic discount. Klarman, who seeks value investments, would likely be attracted to the opportunity to buy FIS's stock at a discounted price relative to its intrinsic value.
2. Strong Financial Performance: FIS has consistently generated strong financial results, with revenue of $10.03 billion and net income of $1.42 billion in the last 12 months. Klarman, who values thorough analysis, would likely appreciate the company's solid track record and the potential for continued growth.
3. Dividend Payout and Growth: FIS pays an annual dividend of $1.44, which amounts to a dividend yield of 1.83%. Klarman, who focuses on value investing, would likely be attracted to the company's dividend payout and the potential for dividend growth, as indicated by the 4.13% revenue growth p.a. and the 17.0% undervalued intrinsic discount.
4. Expansion through Acquisitions and Strategic Partnerships: FIS has grown through strategic acquisitions and partnerships, such as the acquisition of Worldpay in 2019 and the recent acquisition of Demica Limited. These moves have expanded FIS's product offerings and customer base, aligning with Klarman's focus on understanding the context of the current environment and identifying opportunities for growth.
5. Recurring Revenue Streams: FIS has been shifting its business model towards recurring revenue streams, which provide more stable and predictable earnings. This focus on subscription-based and services-based revenue aligns with Klarman's conservative investment approach, as it reduces reliance on one-time transactions and increases the company's resilience to market fluctuations.
6. Technological Advancements and Innovation: FIS has been investing in technology and innovation to stay competitive in the rapidly evolving financial services industry. This focus on technological advancements aligns with Klarman's observation of the accelerating pace of technological disruption across various industries.



In conclusion, FIS's undervalued stock price, strong financial performance, dividend payout and growth, expansion through acquisitions and strategic partnerships, recurring revenue streams, and technological advancements make it an attractive investment opportunity for value investors like Seth Klarman. As FIS continues to execute on its growth strategy and deliver strong financial results, investors can expect the stock price to appreciate and close the gap with its fair value. However, it is essential to consider other factors, such as the company's competitive landscape and potential risks, when making investment decisions.